Removing activity test for Child Care Subsidy critical to accessible early learning
31 August 2022 – A new report by Impact Economics commissioned by Thrive by Five has found that the removal of activity tests to access the Child Care Subsidy will deliver greater benefits to children and their families accessing early learning and childcare, and enabling parents who choose to return to work.
Before the previous Government implemented the Jobs for Families Package in 2018, 31,440 families were entitled to 24 hours of care a fortnight in 2018-19. However this dropped to just 12,110 families by 2021[[1]].
Thrive by Five Director Jay Weatherill said, “The activity test is currently one of the major barriers families face when accessing early learning and childcare. This week’s Jobs and Skills Summit has the potential to change the early learning sector by removing the activity test.
“Doing so will expand the scope of the Child Care Subsidy and provide families better opportunities to access early learning services for children and increase workforce participation of parents.
“Government reform of the Child Care Subsidy will be a critical first step, but this can only happen if the activity test, as it currently stands, is removed.
“Abolishing or simplifying this test would ensure that children and their families have greater access to early learning and childcare that positively supports their development and continued learning.”
Further Background:
The current activity test for the Child Care Subsidy limits access to subsidised child care and is contributing to at least 126,000 children from the poorest households missing out on critical early childhood education and care. As a result, these children are more likely to start school behind their peers, with many never catching up.
A number of vulnerable family groups – compared to families earning over $200,000 per year – are more likely to be subject to the activity test that limits access to care:
- Single parent families are over three times more likely to be limited to one day of subsidised child care per week;
- Aboriginal and Torres Strait Islander families are over five times more likely to be limited to one day of subsidised child care per week;
- Non-English Speaking families are over six times more likely to be limited to one day of subsidised child care per week; and
- Low-income families earning between $50,000 and $100,000 are over six times more likely to be limited to one day of subsidised child care per week.
Families earning $80,000 per year and eligible for one day of subsidised child care per week under the activity test face higher out of pocket costs than families eligible for three or more days of subsidised child care:
- $134 per week higher out of pocket costs for families using two days of care.
- $268 per week higher out of pocket costs for families using three days of care.
