What the changes will mean

Nearly all families will be winners from the $5.4 billion boost to the childcare subsidy over the next four years. The base rate is being lifted from 85% to 90%.

A new cohort of higher-income families earning between $355,000 and $530,000 will for the first time benefit from subsidies.

While details are yet to be finalised, the information provider Entitlemate estimates that a family with $200,000 of income who have a child in long daycare (100 hours a fortnight) will receive a maximum subsidy of $21,000 from the government and will be $5121 better off with the new subsidy. Families earning around $150,000 with one child will be $5600pa better off while a family with an income of $175,000 will have $6720 more. (See entitlemate.com for calculations.)

The family with a $200,000 income and a second child under 6 will get an overall subsidy for the two children in care of up to $46,700. That is more than $23,000 for each child – at least double the maximum from last year. If a family has three children in care under six, the average amount of subsidy per child goes to $24,000.

While the current subsidy cuts out for families on an income of $354,305, the new threshold is lifted to $530,000. This means that a family with an income of $400,000 and three kids under six in care will be eligible for a subsidy of nearly $25,000pa.

There will be an increased subsidy to care outside school hours, too.

The current childcare subsidy is paid directly to childcare centres. It is based on various conditions to maximise the benefit, such as family income, the age of the child, use of an approved childcare centre and how much work, volunteering or study you do.