Government brings forward planned CCS affordability changes to March 2022

Alan Tudge MP, the Federal Minister for Education and Youth, has confirmed that changes to the Child Care Subsidy (CCS), originally scheduled for July 2022, will now come into effect earlier than previously scheduled. 

The CCS changes have been designed to reduce out of pocket costs for certain cohorts of families. Starting 7 March 2022, families with more than one child in early childhood education and care care (ECEC) will have their CCS rate boosted by 30 percentage points for the second child and subsequent children aged five years and under in care, up to a maximum CCS rate of 95 per cent.

In addition, the CCS annual cap of $10,560 per child per year will now be scrapped effective 10 December 2021 and applied retrospectively for the whole 2021-22 financial year/ Families who  reach the cap before this date will have any additional out-of-pocket costs for the year reimbursed.

“These changes are good for families and great for the economy, and it’s significant that we are able to deliver them sooner,” Minister Tudge said, “Removing the cap and increasing subsidies means more parents, particularly mothers, can return to work or take on more hours if they choose to.

Quick legislation passage and departmental cooperation enable earlier application 

The changes, which were first announced as part of the Federal Budget 2021/22, were scheduled to come into effect in July 2022 more than 12 months after the policy announcement, with the Government citing technical complexity around implementing the new policies as the main reason for the long lead time.

However, with (amongst other things) the CCS change legislation being passed faster than expected, the implementation has been pulled forward. 

Commenting in a media conference Mr Tudge said “I always said when we announced this that we would try to bring it forward if we could. We only announced this at the Budget. The advice at the time was that because of the nature and the complexity of the technical build, that it would take until July.”

“I said if we could bring it forward we absolutely would.”

“Now, we got the legislation through more quickly than we had anticipated, and then we’ve been working across the government departments to streamline the process, working with the third party software providers, and we now have great confidence that it all can be built by the seventh of March,” he added. 

Changes expected to impact as many as 250,000 families

According to Government estimates the changes are expected to improve the affordability of ECEC by as much as $2,200 per year for up to 250,000 families with the removal of the CCS cap expected to benefit around 18,000. 

Specifically, the Government noted that those earning $110,000 a year with two children in care, four days a week, will be better off by around $100 each week, and for a single parent who is earning $80,000 with two children in full time care, the changes mean the cost of ECEC provision falls to $5 per day for the second child.

The Treasury expects the equivalent of around 40,000 parents will be able to work an extra day under the plan providing an extra economic boost to the Australian economy of c$1.5 billion. 

“According to the Business Council of Australia, around 90,000 people last year identified the cost of child care as the reason why they weren’t in the workforce,” Jane Hume MP, Minister for Women’s Economic Security said.

“Reducing the cost of child care and removing those disincentives to increasing the number of days or hours that you work, removes one of the major barriers to women’s workforce participation.”

To read Mr Tudge’s announcement please click here and the transcript from the media conference click here.