Fact Sheet 4 – Increasing Childcare Assistance

Summary

From 4 April 2016:

• Low-income families will be eligible for a higher rate of Childcare Assistance for pre-school and out-of-school care.

What is changing?

From 4 April 2016 , the Childcare Assistance rate will increase from $4 to $5 an hour for lower-income families.

This increase helps lower-income parents, including beneficiaries, get access to affordable childcare to support them in employment, education or training.

The new rate will apply to both the Childcare Subsidy for pre-schoolers and the OSCAR subsidy for out-of-school care and school holiday programmes.

A sole parent with one child, for example, will be able to get the new, higher rate if they earn under $41,600 a year.

Working parents can get up to 50 hours of subsidised childcare a week per child, so an increase of $1 an hour is potentially very significant for working families.

What is Childcare Assistance?

Childcare Assistance provides financial support to help families meet the costs of childcare for pre-schoolers and out-of-school and school holiday programmes for older children.

Parents can receive up to 50 hours of the Childcare Subsidy per child for each week they are in employment, education or training.

They can get an OSCAR subsidy for up to 20 hours a week per child during the school term and up to 50 hours a week per child during school holidays. OSCAR subsidies are for children aged 13 or younger.

Income tests apply, according to how many children are in the family.

Parents of children aged three and four can also access the 20 Hours early childhood education programme, and this typically replaces the first 20 hours of the Childcare Subsidy.

Quality early childhood education is recognised as having a positive impact on a child’s ongoing learning and achievement.

Why are these changes being made?

Lower-income working parents rely on access to regular and affordable childcare.

The increased subsidy will have two main effects.

First, it will reduce barriers for parents moving off welfare and into work.

Second, the higher subsidy will lower childcare costs and provide some financial relief for many lower-income families that already use childcare.

In a typical week during a school term around 18,000 lower-income families are expected to be getting the new higher rate, and getting it for an average of 23 hours of childcare. This means a gain for these families of $23 a week.

Over the course of a year, 41,000 lower-income families are estimated to receive the new rate for at least some period of time.

As a result of the increase in the subsidy rate, an increased uptake of preschool and out-of-school care is expected.

More information

These changes will occur in April 2016, and until then payments and obligations are unaffected.

If people have questions about their own particular circumstances, or how they might be affected, they should call Work and Income on 0800 559 009.

ENDS

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