The Federal Government will ditch its free childcare scheme next month, moving to reintroduce childcare subsidies for parents while ending the JobKeeper payment for workers in the sector.

Key points:

  • Free child care will end on July 12
  • The Government will reintroduce the Child Care Subsidy and end JobKeeper for childcare workers
  • A $700 million transition package will be implemented, and extended support will be offered to families

The scheme was introduced in April with the aim of keeping providers afloat during the coronavirus pandemic.

But changes announced by Federal Education Minister Dan Tehan today will see free childcare come to an end on July 12, with a three-month, $700 million support package to be offered to the sector from the following day.

Under the changes, parents will go back to paying for their children’s care, with the reintroduction of the Child Care Subsidy, but the Government will loosen the criteria for subsidised care for families hit by the economic downturn.

“The Government will also ease the activity test until October 4 to support eligible families whose employment has been impacted as a result of COVID-19,” Mr Tehan said.

“These families will receive up to 100 hours per fortnight of subsidised care during this period.”

Changes to government support for the sector will also see the JobKeeper payment ended for workers in the sector.

Instead, the Government will bring in a $708 million support package, which will require employment levels be guaranteed to protect staff coming off of JobKeeper.

The funding will also be contingent on childcare fees being capped at the level they were at in late February.

The transitional funding will last until September 27.

Unidentified child's hands playing with building bricks.

The policy was introduced amid the coronavirus pandemic.(Pixabay)

The free childcare policy was introduced with the goal of continuing the essential service as parents pulled their children from child care at the height of the pandemic.

But Mr Tehan said it was no longer needed.

“What we have seen is demand grow and grow over the last few weeks so that we needed to change the system,” Mr Tehan said.

Mr Tehan said he could not guarantee demand would not shrink when free child care ended.

Changes could sting families: Labor

Labor’s childcare spokeswoman Amanda Rishworth said she was concerned the change would leave many families unable to afford to have their children cared for.

“This could well act as a handbrake on the economy,” she said.

“If women and families are not able to access affordable child care, how are they going to get back to work?”

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Labor says plan to end free childcare will hurt economy

Ms Rishworth called on the Federal Government to formulate a plan for affordable child care, while saying the impact of removing JobKeeper from the sector would be scrutinised by Labor.

“The Government promised to keep JobKeeper going and a few days later they’ve broken that promise,” she said.

“We will be looking very carefully at the impact that this will have on early educators.”

Greens education spokeswoman Mehreen Faruqi said the withdrawal of free child care was a “betrayal”.

“We need a radical revamp of the whole system, and it starts with looking at how we make child care free for good,” she said.