Child care rebate, feeling concerned...

[briggsy's girl]

kelly (and everyone else!) - just thought i'd pop in and try to explain it all in easier terms cos i know how absolutely horrific it is to understand the government websites sometimes (i work with it daily, and still get confuzzled when it's all released, so i don't blame you one little bit!)

just before i start, i'll let you know that the examples i am giving are for families that meet the work/study/training test AND who have their children in APPROVED CHILD CARE - it doesn't apply to registered care. if you're reading this and not sure about the child care that you use, ask them. they'll tell you!

righto - there are two different child care payments for families. first one is the child care BENEFIT that has been ongoing for a number of years. this one IS means tested - and, for most people, is paid direct to the child care centre to reduce what you have to pay each week. up until now, there has been a "minimum" amount that EVERY family was entitled to, no matter what their combined income. Child Care Benefit is paid based on your income estimate, and is a percentage of a basic amount the government has set down. for the new financial year, that amount is $3.47 per hour for a non-school aged child (is a different amount in FDC, or for a school aged child, but i'll answer as if the child is in a long day care centre - eg ABC)

as an example, a couple on a combined income of $80000, with one child in care, would receive 51.87% of $3.47 for every hour that child is in care. if the child care centre you use charges you $70 for a 10 hour day, you're paying $7 an hour

fee per hour: $7.00
child care benefit : $3.47 x 51.87% = 1.799889

out of pocket costs per hour = 7.00 - 1.799889 = 5.200111

fee per 10hour day = $52.01


now, up until the end of this financial year (ie tomorrow), your child care REBATE is 30% of your out of pocket costs - and only applies to families in which both parents meet the work/study/training test. so, in the above example, assuming both parents are working, they would get 30% of that $52.01 rebated for each day

this comes out to $15.60 per day, rebated when your tax is done at the end of the financial year

so, for the current year 07/08 :
cost per day $70.00
CCB $18.00 (rounded)
CCR $15.60

effective out of pocket cost $36.40 per day


the change to the CCR for the new financial year, means that, for a family meeting the work study training test, they will get HALF of their out of pocket costs rebated - so in the above example, the rebate would be half of the $52.00, so $26.00 rebated - AND, it will be rebated quarterly for the first three quarters of the financial year - with the final quarter rebated when your tax is done at the end of the financial year - so you're not having to wait until tax time for that rebate

so, for the new financial year 08/09 :
cost per day $70.00
CCB $18.00 (rounded)
CCR $26.00

effective out of pocket cost $26.00 per day

this leaves this family effectively $10.40 BETTER OFF per day


now, to the higher end families - one child in care, income over $130000 combined.

in the current year, they get that minimum rate CCB i mentioned, so 16.74% of this years CCB (the above example is calculated on next years CCB base rate, this year is $3.37)

so, currently they get:
fee per hour: $7.00
child care benefit : $3.47 x 16.74% = 0.564138

out of pocket costs per hour = 7.00 - 0.5634138 = 6.4365862

fee per 10hour day = $64.37

CCR 30% of that $64.37 is $19.31

so, for the current year 07/08 :
cost per day $70.00
CCB $ 5.64 (rounded)
CCR $19.31

effective out of pocket cost $45.05 per day


same family, in the 08/09 financial year, with NO CCB payable as they are over the income thresholds for CCB

for the new financial year 08/09 :
cost per day $70.00
CCB $ 0.00
CCR $35.00

effective out of pocket cost $35.00 per day

this leaves this family effectively $10.05 BETTER OFF per day - and again, there isn't the need to wait until tax time for those funds to come through


now, from what i can tell, standard cost of living price rises have come in for some child care centres - others appear to be profiteering. the government ARE investigating, and looking at whether they can implement some sort of legislation to prevent profiteering from child care centres based on this. i have personally heard of one of the large commercial centres raising fees by up to 70% - which just disgusts me! this one particular charge increase is the one that has triggered the government to step in so hopefully they'll be forced to reduce their fees...


hope that helped

BG

[Astrid]

My centre put up their fees a fairly minimal amount. They are council run so the fees are based on CPI and the budget allocated to them for the year. I have noticed there have been few articles about ABC and their fee rises.

[MantaRay]

I know we are ok until next year. At the start of this year our cc centre guaranteed not to raise fees again this yaer. I guess we have to wait and see what happens next year. As the owner has lots of other businesses and considers this his "hobby", I'm hopeful we will be ok.

[Tobily]

Our centre just put their fees up but it wasn't much, only a few dollars a day. ABC just announced a fairly hefty price hike the other day - I was talking to a lady I know who has her kids in ABC and their out of pocket for two kids was going up by $110 a week! They're considering pulling their youngest one out.

[Beatrix]

the only people not better off are mums who stay at home and use childcare for a day off

[Visitor7]

Thanks for that info BG.
Just out of curiosty, when you say that parents need to meet the work/study/training criteria, does that apply if you work half of the year, and not the full year?
Me for example, DH works full time, and I will be going back to work p/t in about 6 months. Does that class as meeting the criteria? Or do both partners need to meet the criteria for the full financial year?

[briggsy's girl]

you would get the rebate for the part of the year that you are working - although, if you're on paid or unpaid mat leave, you're still entitled to it for the time off work - i'd say for a maximum of 12 months - when it's processed you're asked for dated etc

while you're a SAHM, unless you're studying, or actively looking for work (ie, registered with a job network member), you won't qualify - but as soon as you return to work, you qualify

[Pandora]

Our centre just put their fees up but it wasn't much, only a few dollars a day. ABC just announced a fairly hefty price hike the other day - I was talking to a lady I know who has her kids in ABC and their out of pocket for two kids was going up by $110 a week! They're considering pulling their youngest one out.

My friends ABC also went up by $55 a week. Maybe its an across the board increase?

DS goes to an independant, not for profit centre, so they would have to be able to justify a price hike of that much in one hit. Normally it goes up by a couple of dollars a year. Last year there was no direct fee increase, but the centre hours decreased from 11 to 10.5 so there was an indirect hourly rise.

I agree with Kelly's original post - its very difficult. On one hand childcare prices are out of reach for a lot of families and on the other, childcare workers IMO should be paid more than what they are for the work that they do. I know the staff at our centre *regularly* buy items for the children (toys, books etc) out of their own pocket.