Families to be spared childcare cuts in federal budget

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The federal government has this morning given the strongest indication yet, that high-income families won’t have their childcare rebates slashed, for fear of pushing women out of the workforce.

While the Productivity Commission had recommended reducing childcare subsidies for families earning more than $160,000 a year, Social Services Minister Scott Morrison this morning told Sky News the federal government’s intention is to encourage people to be in work.

“We don’t want to do things in making changes to this area which could risk eroding workforce participation, particularly for women,” Mr Morrison said.

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Here’s what the Productivity Commission recommended:

  • The current, means-tested childcare benefit, and non-means-tested 50 per cent rebate be rolled into one, means-tested payment.
  • Families earning below $60,000 have access to a rebate of 85 per cent on childcare fees.
  • Families earning $250,000 or more drop from a 50 per cent rebate to a 20 per cent childcare rebate.

However, the minister has indicated the federal budget will maintain the existing level of support for high-income families, which is a 50 per cent rebate for out-of-pocket expenses, according to the Financial Review. Families earning below the $160,000 threshold would have their rebates boosted.

This will, however, require extra revenue – and the government wants to glean this from family tax payment cuts to the tune of $5 billion. However, this has yet to pass through the Senate. At this stage, it appears next week’s federal budget will hand down a status quo decision for childcare rebates. How important is the childcare rebate to your family, and your ability to work?

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