Age Pension

The new child care subsidy explained: How it impacts grandparent carers

May 18, 2018

Many grandparents act as full-time carers for grandkids.

The government is rolling out dramatic changes to its childcare support packages that will have a direct effect on the benefits payments some grandparents receive for caring for their grandkids.

From July 2, the two current child care assistance payments – the Child Care Rebate and the Child Care Benefit – will be replaced by a single Child Care Subsidy payment. Grandparents and great-grandparents who are the main carers of their grandchildren will benefit from the new funds, but how much they get will depend heavily on their circumstances.

The changes come as a recent survey by finder.com.au showed that grandparents were collectively saving working families very close to $2.3 billion a year in childcare fees. Finder’s analysis of Australian Bureau of Statistics (ABS) data also found that 900,000 Aussie children (aged 0-12) are cared for by their grandparents instead of attending formal daycare.

Meanwhile, according to experts published by The Conversation in 2017, about 2.9 million grandparents are ‘custodial grandparents’ – that is, they have the primary responsibility for raising their grandchildren.

If you’re one of the many grandparents who are full-time or substantial carers for their grandkids, here’s how the new Child Care Subsidy could affect you:

For a grandparent to be eligible for the Child Care Subsidy payment, they must look after the child for at least 65 per cent of the time. They must also have “substantial autonomy” over the day-to-day decisions about that child’s care, welfare and development. Essentially, this means grandparents who care for the kids part-time after school are unlikely to be eligible.

For grandparents that are eligible, the amount they’re entitled to can vary greatly depending on their individual situation. Those who are on an income support payment (for example, the Age Pension, Disability Support Pension or even Newstart) will have access to a considerable amount of subsidised child care through the Additional Child Care Subsidy.

They’ll be entitled to 100 hours of subsidised child care per child per fortnight, for which the amount of subsidy they receive will be “equal to the actual fee charged by the child care service, up to 120 per cent of the Child Care Subsidy hourly rate cap, whichever is lower”. The rate cap will vary depending on whether families use centre-based day care, family day care or outside school hours care.

Grandparents who are not on an income support payment but are still the primary carer will also have access to 100 hours of subsidised care per child per fortnight. But the percentage of cost that will be subsidised will be determined by their family’s annual income. For example, if they’re relying solely on an income from their superannuation fund, it will depend how much income is being drawn down.

While parents’ “activity levels” each week determine how much subsidy they receive, grandparents won’t need to meet these requirements to work or study.

The government has urged grandparents who meet the requirements to apply online for what’s called the Additional Child Care Subsidy (grandparent) before July 2. During the online application process, they’ll be asked for evidence of their grandparent relationship, such as birth certificates or a statutory declaration.

They will also have to prove they are the principal carer, which could include a formal court order, third party evidence or a statutory declaration.