The New Child Care Payment Program

Purpose and Structure of the Child Care Subsidy

The goal of the Child Care Subsidy is to make child care more affordable for over 1 million Australian families. Beginning on 2 July 2018, the Child Care Subsidy will replace both the Child Care Rebate and the Child Care Benefit. The Child Care Subsidy assists families with child care fees based on three main things:

  1. Combined family income

This one is straightforward. A larger combined family income lowers the subsidy rate. A family with a combined income of $66,958 or less can receive a subsidy rate of 85%. Families with a combined income of $351,248 or more, have a 0% subsidy. Families that earn more than $186,958, and under $351,248 have an annual cap of $10,190 per year per child. Families earning $186,958 or less will not have an annual cap.

  1. Type of service needed

There is an hourly cap on each type of child care service that the government will subsidise.

  • Centre-based child care hourly cap = $11.77 /hr.
  • The family-based care hourly cap = $10.90 /hr.
  • Outside school hours care hourly cap = $10.29 /hr
  • In-home care hourly cap = $25.48/hr
  1. Activity

The activity test requires parents to work, study, or volunteer for a minimum of 8 hours a fortnight to get subsidies. The government requires parents to do ‘recognised’ activities. The more activities done, the more hours of subsidised child care can be accessed. There is a minimum of 8 hours a fortnight and a maximum of 100 hours a fortnight. Recognised activities include work, study, and/or some sort of volunteering. More specifically, this could mean more work (paid or unpaid), working in a family business (unpaid), actively trying to look for more work, and/or furthering education. If the family earns $65,710 or less per year, but fails to meet the activity test, they can only receive up to 24 hours of child care per fortnight.

Eligibility and Requirements of the Child Care Subsidy
  • The child must be under 13 years old (and not attending secondary school)
  • All immunisation requirements met
Child Care Subsidy Effect on Families

The Child Care Subsidy is meant to help families by making child care more accessible. The targets of the program are low- to middle-income families. Many of the parents of these families work long hours to try to keep up with their rent and other expenses. The activity test portion how the government will determine subsidies could pose a problem for many households. The activity test forces parents to work even more hours, which will require more child care that cannot be afforded. This is mainly because child care costs are steadily rising.