Business worried about potential childcare rebate cuts

A potential cut to childcare rebates in the Federal Budget remains on the table, with the office of Treasurer Wayne Swan saying it wouldn’t rule out the introduction of a means-test for the 50% childcare rebate.

The statement comes despite suggestions that the proposal to introduce a limit to the childcare rebate to those households earning under $150,0000 was knocked back last night by Treasurer’s Budget working group on the grounds it would strip gains in women’s workforce participation rates.

The rebate, which is capped at $7,500 per year, was first introduced five years ago, and has been lifted from 30% to 50% of childcare fees paid by a family in the past few years.

According to reports, applying means-testing to the childcare rebate similar to those on a separate childcare benefit payment – which is limited to those households earning under $140,000 – would affect about 64,000 people, with taxpayer savings put at more than $500 million annually.

The Australian Chamber of Commerce and Industry has been vocal on the issue and its potential impact on mothers in the workforce.

ACCI spokesman David Turnbull says that while the ACCI believes there is a need for cutbacks and savings in the current financial climate, introducing a means-test would have an effect on the number of women going back into the workforce.

“If that was to give rise to a reduction, that would be a concern,” Turnbull says.

Turnbull says any savings from the introduction of a means-test might be overshadowed by falls in participation.

“Will the savings be used to provide more childcare places?” he asks.

The Federal Government has promised a tough budget on May 10 as it seeks to bring the Budget back to surplus by the 2013 fiscal year.