Labor unveils $3 billion childcare plan to win over families

Labor to boost childcare rebate

Labor's policy to increase the childcare rebate will push up prices says Education Minister Simon Birmingham. Vision ABC News 24.

The Turnbull government has rubbished Labor's $3 billion childcare cash-splash including a rise in the annual rebate to $10,000 per child, saying Opposition Leader Bill Shorten did not have "the faintest clue" how he would fund the pledge.

Mr Shorten on Sunday sought to outbid the government with a childcare policy – one of Labor's biggest election announcements so far – to come into effect on January 1 next year. It would include lifting the childcare benefit by 15 per cent to help low and middle-income families.

Election 2016: Bill Shorten's gamble

Is the Opposition Leader risking his chances of becoming PM? Chief political correspondent Mark Kenny explains.

The Turnbull government's $3 billion childcare overhaul has been delayed until at least 2018. It would be funded through cuts to family tax benefits – a change which Labor opposes.

When asked how Labor would pay for the policy, Mr Shorten

pointed to a broad range of savings measures including social security changes, Labor's opposition to company tax cuts, and its plan to restrict negative gearing subsidies and maintain the high-income deficit levy.

"I understand how difficult it is for the working woman with kids to work out how on Earth does she go to work if 80 per cent of what she's earning gets eaten up in childcare fees?" Mr Shorten said. 

Under the Coalition's plan, funding for which was blocked in the Senate, the childcare rebate and childcare benefit would be replaced by a single means-tested subsidy. Families earning up to $65,700 would get a subsidy of 85 per cent of the actual fees charged, tapering down to 20 per cent when family income reaches $340,000.

On Sunday, Education Minister Simon Birmingham said the government proposal was comprehensive and focused on families working the longest hours and earning the least money.


"Amazingly, Mr Shorten wants to junk those reforms we've proposed in favour of a short-term, unfunded Band-aid," Mr Birmingham said.

"They've spent $3 billion without having the faintest clue where that money is coming from."

He criticised Labor's pledge to scrap a proposed activity test, under which parents must work, study or volunteer for a specified number of hours to be eligible for childcare assistance, saying the measure ensured subsidies were given to parents who "make a contribution" to society.

Labor's childcare policy aims to deliver affordable childcare for families.
Labor's childcare policy aims to deliver affordable childcare for families. Photo: Alex Ellinghausen

Labor says its pledge to increase the annual childcare rebate from $7500 to $10,000 per child could save families up to $5000 a year.

It says 107,800 families who would otherwise reach the rebate cap next financial year would not have to choose between paying "double fees", or leaving the workforce.

Under its proposed childcare benefit increase, 813,000 eligible families would be better off – some to the tune of $1627 per year, Labor says.

Opposition Leader Bill Shorten during a visit to Bestchance Child and Family Care Centre in Glen Waverley.
Opposition Leader Bill Shorten during a visit to Bestchance Child and Family Care Centre in Glen Waverley. Photo: Alex Ellinghausen

It also pledged a crackdown on unjustified childcare price hikes, an extra $50 million for family day care and $150 million to develop early education workers.

Mr Shorten spoke with Leni Ciuro, who said childcare costs for her son Louis rose from $90 to $120 a day over a few years, meaning she reached the annual rebate cap sooner.

The contract photographer was forced to find more shifts to cover the cost, including out-of-hours editing work.

Federal Education Minister Simon Birmingham wants one funding model for all states.
Federal Education Minister Simon Birmingham wants one funding model for all states. Photo: Louise Kennerley

"The more shoots I have to do, the more time I'm spending in front of the computer and the less time ... I get to actually spend with [my family]," she said.

Louis has started school, but the Coalition's delayed changes would come too late to help pay for her daughter Harriet's childcare and "I'd have to go the next two years still struggling," she said. 

Jo Briskey, executive director of parent advocacy organisation The Parenthood, said Labor's announcement "recognises that parents can't wait any longer for action on childcare costs".

"In comparison, Mr Turnbull and the Liberals are making families wait until 2018 for relief - and that's simply not good enough," she said.

The increased childcare rebate "will make a huge difference for family budgets" and a 15 per cent increase in the childcare benefit will also help household budgets of working families, she said.

Follow us on Twitter