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Frydenberg reveals $1.7bn childcare package ahead of job-focused budget

The government has announced a $1.7 billion childcare package ahead of next week’s federal budget as it looks to reduce the “structural disincentive” facing families returning to work.

Business Jotham Lian 03 May 2021
— 1 minute read

The announcement is set to benefit 250,000 families with more than one child aged five and under in childcare, with subsidies set to increase by 30 per cent to a maximum subsidy of 95 per cent of fees paid for their second and subsequent children.


The $10,560 cap on the Child Care Subsidy will also be removed, benefiting around 18,000 families.

“These changes strengthen our economy and at the same time provide greater choice to parents who want to work an extra day or two a week,” said Treasurer Josh Frydenberg on Sunday.

“This is a targeted and proportionate investment that simultaneously makes childcare more affordable, increases workforce participation and boosts the Australian economy by up to $1.5 billion per year.”

The changes, announced ahead of next Tuesday’s federal budget, come as the government commits to driving down the unemployment rate before turning its attention to reducing Australia’s net debt.

“Despite the strength in our domestic economic recovery, the unemployment rate is not yet ‘comfortably below 6 per cent’,” said Mr Frydenberg in his pre-budget speech last Thursday.

“We will not move to the second phase of our fiscal strategy until we are confident that we have secured the economic recovery.

“We first want to drive the unemployment rate down to where it was prior to the pandemic and then even lower. And we want to see that sustained.”

With uncertainty still a main feature in the economy, CPA Australia’s Jane Rennie said accountants can expect the budget to deliver measures targeted at historically underfunded sectors.

Major tax measures will be unlikely, notwithstanding a predicted extension of the $1,080 low and middle-income tax offset (LMITO) for a further year.

“It’s probable the government will use this budget to tackle a number of important issues rather than focusing solely on COVID-induced recovery,” Dr Rennie said.

“Aged care, healthcare and women’s economic security, for example, are areas which have been underfunded in the past. We anticipate they’ll be the subject of some of this year’s bigger spending announcements.”

To deliver its goal of reducing unemployment, Dr Rennie believes the government should relook at the criteria of the JobMaker program, which has reportedly created just over 600 jobs out of an expected 450,000.

“We think a payment should be made upon the recruitment of a long-term unemployed person, without the requirement for a net increase in headcount — which was one of the design issues that blighted the success of the JobMaker,” Dr Rennie said.

“Automatically paying the employer, rather than having them apply to the ATO, would cut red tape and increase uptake of the program.”

Frydenberg reveals $1.7bn childcare package ahead of job-focused budget
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Jotham Lian

Jotham Lian

Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.

Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.

You can email Jotham at: This email address is being protected from spambots. You need JavaScript enabled to view it.