One of the biggest money savers for Aussie families in the 2021 federal budget is the $1.7 billion childcare package aimed at easing the out of pocket expenses of working parents.
We’ve broken down just exactly what it means, what you might save and how it works.
How you can save up to $2,260 a year in childcare
Currently, working parents are able to get a maximum rebate of 85% of the cost of childcare but this is about to change to the tune of saving families approximately $2,260 per year in childcare costs.
“This is a targeted and proportionate investment that simultaneously makes child care more affordable increases workforce participation and boosts the Australian economy by up to $1.5 billion per year.” Treasurer Josh Frydenberg said of the childcare initiatives.
Two of the main parts of these initiatives for families with children in childcare, from 1 July 2022 families will see:
- An increase in the rebate or subsidies available to working families with more than one child under 5 years old in childcare from 85% to 95% which is set to help around 250,000 families.
- Removal of the $10,560 cap on the Child Care Subsidy for those who are eligible, helping around 18,000 families.
This means that for families with more than one child in childcare, the level of subsidy will increase by 30% to a maximum subsidy of 95% for their second and subsequent children.
How does this translate to savings on childcare for your family?
To put these initiatives into perspective below are some examples and the money that can be saved.
- A single parent earning approx $65,000 with two children in four days of long daycare you can now choose to work the fifth day and save $71 a week compared to the current system
- A two-income household earning $80,000 combined if you have two children under 5 years old in childcare you’ll now save around $54 a week in childcare costs. If you have three children under 5 years old in childcare you’ll save $108 per week for 4 days of childcare as your subsidy will increase from 82% to 95% for the second and third child.
- A two-income household earning $110,000 combined, you’ll save about $95 a week when your subsidy for your second child under 5 years old in childcare increases from 72% to 95% for 4 days of childcare.
- A two-income household earning $140,000 combined, if you have two children under 5 years old in childcare you’ll now save $125 a week in childcare costs.
- A high-income household earning more than $189,390 combined will benefit from the removal of the cap of $10,560 on childcare subsidies and be able to continue to claim subsidies on childcare costs above $10,000 a year.
These initiatives are similar to what has been promised by Labor if they win government at the next federal election with Labor Anthony Albanese previously announcing that Labor would cover up to 90% of childcare fees for eligible families with a 95% rebate.
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