Abbott government flags scrapping the $7500 childcare rebate cap

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The federal government could scrap the $7500 cap on the childcare rebate, concerned that excessive out-of-pocket costs incurred after the cap is exceeded are preventing parents from going back to work.

Currently the Government provides parents with 50% of their childcare costs, up to an annual cap of $7500 per child per year. If costs exceed this cap the rebate drops to zero.

Social Services Minister Scott Morrison has suggested scrapping the cap in exchange for cutting back the rebate for families with a combined ­income of more than $180,000.

He told The Sunday Telegraph, “If someone was able to have no cap and therefore work more hours, there is a perception that having a lower level of subsidy would be a reasonable trade-off.

“What is more important to those families … is the inflexibility of the cap rather than the level of subsidy,” he said.

Scrapping the rebate was also a key recommendation of the Productivity Commission into childcare.

Should the move go ahead it would be announced in the May budget.

Liberal Democratic Party senator David Leyonhjelm has said: “Having kids is not a social service that governments should subsidise, it is a choice,” reiterating that it would be unfair to childless families.

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