http://www.smh.com.au/news/national/childcare-bonanza-for-top-earners/2008/03/09/1204998283747.html
Child-care bonanza gives top earners $1000 extra help
March 10, 2008
HIGH-INCOME families will receive an extra $1000 or more a year to help with their child-care costs under the Federal Government's revamped tax rebate.
New figures show high-income earners will benefit handsomely when the rebate is lifted from 30 per cent to 50 per cent of out-of-pocket child-care expenses, as promised during the election.
Last week, low-income carers of disabled and elderly relatives learnt their $1000 and $600 annual carer bonuses could be scrapped, although the Prime Minister has since indicated taking a softer approach. But the child-care data, provided to the Herald by Peter McDonald, professor of demography at the Australian National University, shows high-income families will be big winners when the new child care rebate is paid in October.
For the first time, all Australian families, irrespective of income, will have more than half their child-care bill paid by the Government. While all families will get significant help under the complex system of assistance, a family on $100,000 with a child-care bill of $6720 a year - based on 20 hours of child care a week - will get an extra $1169. At present the family gets $2614 or 39 per cent of their child-care costs; under the new system it will get $3783 or over 56 per cent.
The rebate will be even greater the more child care they use - up to 50 hours a week.
A family on $35,000 paying the same child-care bill will get more than 74 per cent back under the new system compared with 63.7 per cent today. But in dollar terms the increase in help will be $712 - from $4280 to $4992.
Professor McDonald, an expert on the family and child-care payment system, said the Government should not scrap the carers' bonus. But the extra help for child care costs, even for high-income families, was "money well spent", not middle-class welfare. "Middle class welfare is a term used exclusively to refer to people getting family payments that help women return to work and pay taxes. It is never used to refer to other kinds of benefits that are also not income-tested, like the fuel rebate, benefits to business, and the tax breaks for superannuation."
Professor Deborah Brennan, a social policy expert from the University of NSW, said there was a high risk the increased child-care rebate would bring only short-term relief. "There is nothing in the payment mechanism to prevent this being very quickly absorbed into higher fees," she said.
Families are eligible for two payments: the child-care benefit, which reduces fees according to family income and is of greater benefit to low-income families; and the child-care tax rebate.
The rebate is not means-tested. Because high-income families receive only a small amount of child-care benefit, they have high out-of-pocket costs. These will be substantially cut by the increased rebate.
Child-care bonanza gives top earners $1000 extra help
March 10, 2008
HIGH-INCOME families will receive an extra $1000 or more a year to help with their child-care costs under the Federal Government's revamped tax rebate.
New figures show high-income earners will benefit handsomely when the rebate is lifted from 30 per cent to 50 per cent of out-of-pocket child-care expenses, as promised during the election.
Last week, low-income carers of disabled and elderly relatives learnt their $1000 and $600 annual carer bonuses could be scrapped, although the Prime Minister has since indicated taking a softer approach. But the child-care data, provided to the Herald by Peter McDonald, professor of demography at the Australian National University, shows high-income families will be big winners when the new child care rebate is paid in October.
For the first time, all Australian families, irrespective of income, will have more than half their child-care bill paid by the Government. While all families will get significant help under the complex system of assistance, a family on $100,000 with a child-care bill of $6720 a year - based on 20 hours of child care a week - will get an extra $1169. At present the family gets $2614 or 39 per cent of their child-care costs; under the new system it will get $3783 or over 56 per cent.
The rebate will be even greater the more child care they use - up to 50 hours a week.
A family on $35,000 paying the same child-care bill will get more than 74 per cent back under the new system compared with 63.7 per cent today. But in dollar terms the increase in help will be $712 - from $4280 to $4992.
Professor McDonald, an expert on the family and child-care payment system, said the Government should not scrap the carers' bonus. But the extra help for child care costs, even for high-income families, was "money well spent", not middle-class welfare. "Middle class welfare is a term used exclusively to refer to people getting family payments that help women return to work and pay taxes. It is never used to refer to other kinds of benefits that are also not income-tested, like the fuel rebate, benefits to business, and the tax breaks for superannuation."
Professor Deborah Brennan, a social policy expert from the University of NSW, said there was a high risk the increased child-care rebate would bring only short-term relief. "There is nothing in the payment mechanism to prevent this being very quickly absorbed into higher fees," she said.
Families are eligible for two payments: the child-care benefit, which reduces fees according to family income and is of greater benefit to low-income families; and the child-care tax rebate.
The rebate is not means-tested. Because high-income families receive only a small amount of child-care benefit, they have high out-of-pocket costs. These will be substantially cut by the increased rebate.
