How childcare subsidies will change

CHANGES TO CHILDCARE FEE SUBSIDIES:

* Scrap the existing system of payments including the Child Care Rebate (covers 50 per cent of fees up to annual cap of $7500) and the means-tested Child Care Benefit.

* Replace them with a single, means- and activity-tested subsidy.

* Activity test means both parents must work, study or volunteer at least eight hours a fortnight.

* Payment covers 85 per cent of fees for families on $65,710 or less.

* Covers 50 per cent of fees for families on $170,710-$250,000.

* Tapers down to 20 per cent between $250,000-$340,000

* Families earning more than $350,000 receive no subsidy

* Fee subsidies based on a set hourly rate ($11.55 centre-based day care, $10.70 family day care, $10.10 outside school hours care).

* No annual cap on subsidies for families on $185,710 and under.

* $10,000 annual cap on subsidies for families earning more than $185,710.

* A bonus subsidy for disadvantaged families, such as those with children at risk of abuse or neglect; those experiencing temporary financial hardship; grandparent carers on welfare.

* Starts on July 2, 2018.

* 1.2 million children were in child care in 2016.

* Government figures say almost 816,000 families will be better off.

* 128,000 families will get reduced subsidies, including 52,100 earning less than $65,710 a year (mainly due to activity test).