Welfare cut looms

Childcare support revamp to rake in $5b

HUNDREDS of thousands of families will miss out on extra welfare payments to pay for the biggest overhaul of childcare support in decades.

Almost $5 billion will be slashed from the nation’s welfare bill after a deal was struck with crossbench senators to freeze the family tax benefit for two years.

The Federal Government says no families will be worse off, as parents receive a major financial boost to tackle the rising costs of childcare.

A planned $20 increase to fortnightly family tax payments has also been ditched.

And low-income parents and young jobseekers will now have to wait a week before receiving government handouts.

But the savings measures will pave the way for reform of childcare, scrapping a complex web of payments and rebates in favour of a single meanstested subsidy.

The $1.6 billion plan – which the government hopes will pass parliament this week – will compensate parents for childcare costs if they are working or studying at least eight hours a fortnight.

Low-income families will get back 85 per cent of the fees they pay. The rebate will reduce as parents earn more and there will be no cap on payments to families earning less than $185,710.

A dual-income family with two children under six in daily childcare would be almost $8000 a year better off.

Education Minister Simon Birmingham said the system was broken and the reforms would make it “more affordable, accessible and fairer”.

“As fees and expenses put early childhood education and care increasingly out of reach for many families, it’s time … to act,” he said.

But Opposition families and social services spokeswoman Jenny Macklin accused the government of reviving the “unfair zombie cuts” of Tony Abbott’s 2014 Budget.

Freezing family tax benefit rates would save almost $2 billion over four years and scrap- ping the planned $20 increase another $2.3 billion.

The freeze means a dual-income family on $50,000 with two children in primary school would miss out on about $3 extra each week.

Senator Nick Xenophon said the changes would “ensure families will not receive less money each fortnight than they receive now” and removed the worst aspects of an omnibus Bill that had combined the childcare reforms with welfare savings.