Families earning between $65,000 and $170,000 are set to be about $30 a week better off under the federal government's long-awaited childcare package, in a move that has been hailed by childcare experts as a "historic reform".
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But Labor and the Greens pushed back on the Coalition's proposal that the extra $3.5 billion in childcare funding would be paid for by cuts to family tax benefits, in a sign of a looming Parliamentary showdown over the new policy
Others in the childcare sector also expressed concern that children whose parents are not working would miss out on early learning opportunities because of a crackdown on the number of hours parents will have to work in order to qualify for payments.
The Abbott government has estimated that more than 240,000 families will be "encouraged" to increase their work hours, due to a funding boost for low and middle income earners and the tougher work requirements.
Social Services Minister Scott Morrison said the government was trying to change families' "kitchen table" conversations about "how do I stay in work? How do I get in work?"
The new policy will see the current system of multiple childcare payments rolled into one subsidy, which is means tested and paid directly to childcare providers. But families will have to wait more than two years – until July 2017 – for the changes to bring any relief to childcare services that many complain are hard to access and difficult to afford.
The changes will see families on incomes of up to about $65,000 a year get 85 per cent back of their childcare fees. This will reduce to 50 per cent for families earning about $170,000 or above. Parents will get a percentage of their actual childcare fees or a new benchmark price, whichever one is lower.
The hourly rates for the benchmark price are more generous than those recommended by the Productivity Commission, which also recommended that the current multiple payments were combined into one.
By the time the package is implemented in 2017, hourly rates are due to by $11.55 for long day care, $10.70 for family day care, $10.10 for out of school hours care and $7.00 for nannies.
But parents will have to work at least eight hours a fortnight to get up to 36 hours of subsidy every two weeks, and work at least 49 hours to get the full 100 hours per fortnight subsidy. Currently many parents are able to access payments without working at all.
The federal government says the new childcare spending will be "offset by savings," which includes savings around family tax benefits, that are stuck in the Senate – a move that has met strong resistance from Labor and the Greens.
"Tony Abbott is holding families to ransom with cuts to family tax benefits that would start now if he had his way, leaving some families as much as $6000 worse off," Labor's families spokeswoman Jenny Macklin said.
Advocacy group The Parenthood also said it was concerned the new package was "tarred" by the fact it was "depending on taking money away from thousands of other families".
The package was welcomed on Sunday by the childcare sector, including United Voice, the union which represents childcare workers, and the Early Learning and Care Council, which represents some of the biggest childcare providers – who hailed the extra funding and streamlined system.
Childhood peak body Early Childhood Australia also praised the long-awaited families package as a "historic reform," but chief executive Sam Page expressed concerns that workforce participation had been placed "ahead of the interest of children".
"It is often children whose parents aren't working that benefit the most of access to quality early learning," she said.
Greens spokeswoman for childcare Sarah Hanson-Young said the package had also done nothing to tackle waiting lists for childcare centres, which she described as "the real problem".