Improving Childcare Assistance for low and middle-income families - Budget 2021

We want to make sure eligible families can continue to access income-tested childcare support as their earnings increase.

We’re adjusting income thresholds for Childcare Assistance in line with average wage growth each year.

Government is investing $13.298 million over four years to improve Childcare Assistance for low to middle-income families.

• The Ministry of Social Development provides income-tested support for childcare for low to middle-income families.
• Childcare Assistance includes the Childcare Subsidy for young children to access early childhood education, and the Out of School Care and Recreation (OSCAR) Subsidy for before and after-school services and holiday programmes for school age children.
• Income thresholds determine the amount of Childcare Assistance a family can get based on how much they earn. The thresholds have been frozen since 2010. As a result, some working families have been unable to get Childcare Assistance as their earnings increased.

From 1 April 2022, income thresholds for Childcare Assistance will be adjusted each year in line with average wage growth.

• Indexing Childcare Assistance to average wage growth will make it more financially attractive for some parents to work, and to remain in work.
• From 1 April 2022, thresholds will be adjusted each year in line with wage growth. Over time more families are expected to become eligible for Childcare Assistance.
• The change does not affect Childcare Assistance subsidy rates. Any changes to the subsidy rates will be considered as part of a broader review of the scheme which will start in June 2021.
• A separate change from 1 July 2021 means the following types of supplementary assistance won’t be counted as chargeable income for Childcare Assistance:
  • Accommodation Supplement
  • Temporary Additional Support
  • Special Benefit
  • Disability Allowance
  • Special Disability Allowance
  • Youth Payment and Young Parent Payment incentive payments
  This ensures increases in supplementary assistance, including the flow-on effects of main benefit increases, won’t affect people’s Childcare Assistance eligibility or rates.

Costs