The Turnbull government is reportedly planning to prune the proposed cuts on its childcare package in a bid to avoid hurting poor households by reducing their family benefit doles. The plan is to slash childcare subsidies for the wealthiest families by 20 percent by reducing subsidies from 50 percent to 30 percent, with a ceiling on those earning more than $230,000 per annum.

Childcare package

The yet-to-be-introduced $3.5 billion childcare package was announced in Tony Abbott’s 2015 budget. Hoping that the right sizing of child care dole plan will soften the cuts on family benefit payments, the government is keen to ensure the smooth passage of both the policies in the senate. The cut on family benefits has already been announced by the Turnbull government, the Guardian reported.

The child care plan was conceived with bigger handouts to all working parents from 2017, irrespective of income, and was to be supported by cuts from family benefit payments. Now the revamped plan will reduce the expected savings from family tax benefit cuts to $4.8 billion, compared to the envisaged $8.5 billion.

Another sop will be the raising of the age limit of the youngest child at which single-income families have their benefits cut off, from six to 13 years.

The reduction in childcare subsidies to the wealthiest was supported by Chief executive of the Australian Council of Social Service, Cassandra Goldie, who said the move was welcomed if the childcare changes were meant to modify the family payment outs.

Education minister Simon Birmingham also said changes to the childcare package are in the offing, although nothing has been finalised. He said the government is in discussions to ensure passage of both the schemes.

Despite the cuts, the childcare package could still be lucrative as it can add $2,500 per child per year to families with annual incomes more than $185,000.

However, the initiative has received flak from the Opposition, with Labor’s childcare spokeswoman Kate Ellis saying the Liberals looked clueless despite the productivity commission review elapsing 21 months.

“The Liberals promised more affordable and accessible childcare, but so far all they have delivered is confusion,” she said.

Eligibility tussle

Meanwhile, the norms set for parents to leverage childcare entitlements may change multiple times a year. Many parents and childcare groups have warned the government about the possible burden on busy families, reports The Sydney Morning Herald.

According to a survey by childcare provider Goodstart, in 2014, almost half (45.3 percent) of parents had moved among the three “activity tests” levels proposed by the coalition. The norm measures how work/study hours should be computed to qualify for the different grades in childcare subsidies.

One fourth of the 890 parents surveyed said their levels changed at least three times in a year. Under the new activity tests, effective from July 2017, parents need to work or study between 8 and 16 hours a fortnight to enjoy 36 hours of subsidised childcare.

Similarly, parents need to work between 17 and 48 hours to be eligible for the 72 hours' subsidy, and more than 49 hours if they want to qualify for the 100 hours' benefits.

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