Free preschool for all and $1.7b childcare boost for families

Announced on top the extra $1.7 billion for the childcare subsidy, the early childhood education funding will provide stability for the sector, the government said.

The funding for preschool, called kindergarten in some states, will be delivered through a four-year strategic reform agreement with the states and territories, in which states and territories will be expected to agree to reforms that will increase participation and improve readiness for school.

From 2024, the funding will be tied to states and territories meeting attendance targets for preschool. A measure to track preschool outcomes will also be developed and trialed for introduction in 2025, the government says.

"Preschool is a vital time in a child's development and prepares them for the educational journey ahead," Treasurer Josh Frydenberg said in the budget speech.

Overall, the childcare bill for the government will be $9.7 billion in 2021-22, with the extra $1.7 billion on measures to make it easier to have more than one child in childcare will come into effect in July 2022, and run for four years.

As announced before the budget, from next year the maximum childcare subsidy for families with two or more children aged under five will increase from 85 per cent of the cost of care to 95 per cent.

Under the current system, families with a combined income of $189,390 have a childcare subsidy cap of $10,560 per child, which will be removed.

The government says this means families won't have to choose between working an extra day at work and having that income being eaten up by childcare fees, and will both ease financial pressures on households and have a positive effect on productivity..

Mr Frydenberg has said the policy would allow up to 300,000 extra hours of work a week, and allow the equivalent of 40,000 people to work an extra day a week. He said it would boost gross domestic product by $1.5 billion each year.

Natalie Raffenot, a contractor living in Canberra after moving from Queensland, said the new childcare measures were unlikely to make a difference to her life as a single mum of four children.

Ms Raffenot's older three children are at school, and her youngest, Evie, is in childcare three days a week, and is cared for on other days by Ms Raffenot's mother.

"My issue with childcare is that they give you a subsidy of 100 hours a fortnight. Last time I was looking at it, you get discounted for four days but you pretty much have to pay most of the fifth day," she said.

With her older children using after-school care, the proposed changes won't reduce the overall cost of the Raffenot family's care needs.

"I wish there was more thought into single parents getting more of a discount," Ms Raffenot said.

The government has framed the changes as allowing parents to work more days without the cost of childcare becoming a disincentive to work. Ms Raffenot said as a single parent trying to make ends meet, she sometimes questioned whether working was actually worth it.

"It doesn't make sense financially to work," she said.

"I'm lucky because I get paid better than the average worker, but it's a month by month basis whether I should work or not because it's such a headache."

Just over $9 million will be spent to develop a family-focused childcare website to get accurate information about local services, fees and vacancies, and $7.7 million on a pilot for new monitoring and compliance efforts to prevent and detect fraud in the childcare system.

Our journalists work hard to provide local, up-to-date news to the community. This is how you can continue to access our trusted content: