Child care reforms: What they mean for you

Childcare rebates for working families will increase under new government measures
Childcare rebates for working families will increase under new government measures Tony Gough, News Corp Australia

MUMS and dads receiving family tax benefit payments won't get any less than they are receiving now under the Government's new omnibus savings bill.

Family Tax Benefit payments will be frozen at current rates for two years under the proposed changes from July 1.

It will mean families will continue to receive the same payments they are getting now until July 1, 2019, but the payments will not increase at the rate of indexation as they normally would.

The government claims it will save $2 billion over four years through temporarily freezing the payments at current rates to secure the $1.6 billion it needs to bring in child care reforms.

About 840,000 families with children in childcare will be impacted by the changes.

Under the proposal, which looks set to pass with the support of Senator Nick Xenophon, the government will scrap the existing complex system of payments for child care.

These include the Child Care Rebate, which covers 50 per cent of child care fees up to an annual cap of $7500, and the means-tested Child Care Benefit.

It will replace them with a single, means- and activity-tested subsidy.

The activity test means both parents must work or study at least eight hours a fortnight to receive payments.

Families on $65,710 or less will now have 85 per cent of their child care fees covered.

Those on $170,710-$250,000 will have 50 per cent of their fees covered.

At this stage, families on $340,000 will have 20 per cent of their fees covered.

However crossbench senators David Leyonhjelm and Derryn Hinch - whose vote the government will need to pass the reforms - say the government has agreed to scrap subsidies for wealthy families completely.

Families with a combined salary of more than $185,710 a year will have payments capped at $10,000 annually.

But there will no longer be a cap for families earning $185,710 or less.

It's understood the reforms will include a bonus subsidy for disadvantaged families, such as those with children at risk of abuse or neglect, those experiencing temporary financial hardship, or grandparent carers on welfare.

The Coalition is still proposing to extend wait times for people on single parent payments or youth allowance as part of savings to pay for the childcare reforms.

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