Boost to Govt's flagship childcare rebates after uptake issues

Childcare rebates from the Government's flagship FamilyBoost scheme will rise with eligibility expanded, Finance Minister Nicola Willis has announced.

Willis announced the changes this morning, which will see rebates increasing from 25% to 40% of weekly fees. Those with household incomes of up to $229,000 are now also eligible to apply. It comes after the programme saw lower-than-expected uptake.

"This means for example that a family with early childhood fees of $100 a week could have their weekly FamilyBoost payment increased from $25 a week to $40 a week, meaning their annual payments would increase from $1300 to $2080 over the course of a year, making them hundreds of dollars better off," she said.

Legislation giving effect to the changes will be introduced in time for the increases to be in place when households next claim rebates in October.

Changes will apply to fees incurred from July 1.

Willis said, "tens of thousands of households will be better off thanks to the changes".

"FamilyBoost rebates are calculated according to the weekly fees parents pay, so the maximum payment is also increasing, from $75 a week to $120 a week."

The maximum refund is only available to those who pay weekly fees of $300 or more.

"However, it’s important to note that parents at all fee levels can now claim 40% of their total fees, so these changes will result in bigger payments for many families who already take part in the scheme," the Finance Minister said.

“Cabinet has also decided to increase the number of families eligible for the scheme by reducing the abatement rate for families earning more than $140,000.

"This means the upper limit for households to receive a portion of FamilyBoost increases from $180,000 a year of income to just under $230,000."

Willis said the change to the scheme would be accommodated within existing funding dedicated to FamilyBoost when it was introduced at Budget 2024.

"I encourage all households who think they may be eligible for FamilyBoost to register for it on Inland Revenue’s website. Families who have done so tell us it is simple to do and only takes five minutes," she said.

"FamilyBoost is paid out every three months. The changes will apply to fees paid from July 1, with claims available to be made from October 1.

"We have also asked officials to progress work on longer-term improvements to the scheme, including by having fees information provided directly to Inland Revenue by ECE providers."

The Government's FamilyBoost programme was part of the coalition's flagship set of cost-of-living initiatives introduced last year, including tax cuts.

When FamilyBoost was first introduced, officials estimated that up to 100,000 families could be eligible for portions, with 21,000 entitled to the full payment.

But to date, 60,000 families have received payments from the scheme, and fewer — with April data suggesting only hundreds — receiving the full $75-a-week amount.

Families have four years to claim FamilyBoost refunds, and as a result, the final actual uptake will not be known for some time and will depend on how many families choose to apply for the scheme, a Government spokesperson said.

Labour has previously called the policy a hard-to-access "bureaucratic nightmare" on the basis of uptake figures, and deemed it a "failure". Acting finance spokesperson Megan Woods said today's changes were a sign the Government was "scrambling".

“More than halfway through their term, the Government is only now scrambling to tweak a scheme that’s barely reached a fraction of the families they promised to help

“Even worse, families won’t see a cent of this so-called relief until October. If Nicola Willis truly understood the cost-of-living crisis then she’d have acted a long time ago," she said.

Meanwhile, the Greens' early childhood education spokesperson Benjamin Doyle used the Government announcement to call for an end "profit-driven ECE sector".

"$15 more a week for a small number of families who can jump through the hoops to apply is a pittance in this cost-of-living nightmare. We need a whole system reset."