Free childcare for working families

The Federal Government has today announced an extra $300 million in subsidies to allow free childcare for working parents and carers, adding to existing support schemes and $1 billion from the JobSeeker package to assist wages in the sector.

Normally the fees paid to childcare centres are split between the Commonwealth Childcare Subsidy (CCS) and parents.

But today the government has announced it will pay 50 per cent of the sector's fee revenue up to the existing hourly rate cap, which will be based on a point in time before parents started withdrawing their children in large numbers.

The sector would have received an estimated $1.3 billion if current revenues and subsidies had continued, but now that has been lifted to $1.6 billion. 

Childcare eligibility will no longer be means tested and the new measures are expected to assist one million families Australia-wide, not just with traditional childcare and early learning services but also after-school care and vacation care. 

The initiative is designed to ensure anyone with a job can continue to work without needing a trade-off with their family's wellbeing, while also ensuring doors remain open for the sector's 13,000 child care and early learning services

"Relief is on its way for around a million Australian families and thousands of early learning educators and carers," Prime Minister Scott Morrison said, emphasising we would likely be dealing with coronavirus-related restrictions and challenges for the next six months. 

"These services are vital for so many parents so they can provide for their family, and children need as much familiarity and continuity as we can help provide at this unsettling time.

"Priority will be given to working parents, vulnerable and disadvantaged children that need early education more than ever and parents with pre-existing enrolments."

The new system will see payments start flowing at the end of next week. The system will be reviewed after one month, with an extension to be considered after three months. The payments will be paid in lieu of the Child Care (CCS) and Additional Child Care Subsidy payments.

Minister for Education Dan Tehan said the assistance package would ensure services remained open to serve families that needed to work and support vulnerable children.

"The Federal Government is working with states and territories and the sector to minimise the impact of coronavirus," Tehan said.

"This package will help support families during these difficult times, particularly those who have lost their job and are doing it tough.

He said until payments arrive the government would be allowing services to waive gap fees for families who keep their children home, and families will be able to use the 20 extra absence days the government has funded for coronavirus-related reasons without giving up their place in a child care centre.

"If you have terminated your enrolment since 17 February, then I encourage you to get back in contact with your centre and re-start your arrangements," he said.

"Re-starting your enrolment will not require you to send your child to child care and it certainly won't require you to pay a gap fee. Re-starting your enrolment will, however, hold your place for that point in time when things start to normalise, and you are ready to take your child back to their centre.

"We will also make payments of higher amounts available in exceptional circumstances, such as where greater funding is required to meet the needs of emergency workers or vulnerable children."

There is a range of government assistance available to early learning and child care operators. Most services operate as small businesses, with 79.9 per cent of providers operating a single service, while 95.9 per cent operating fewer than five. The available assistance includes:

• The $130 billion JobKeeper payment;
• A cash flow boost of at least $20,000 and up to $100,000 with payments equal to 100 per cent of businesses' and not-for-profits' salary and wages withheld; and
• Loan guarantees so businesses can get working capital.

National Cabinet is also considering short-term intervention for commercial tenancy arrangements.

Updated at 1:59pm AEDT on 2 April 2020.