Childcare fees will be slashed next month for the 1.2m families that benefit from a government subsidy for working parents.

Amendments to family assistance legislation will spring into action from July 1, off the back of yet another rise in the cash rate target from the Reserve Bank of Australia earlier this week.

The Australian government is promoting the changes coming into effect in the new financial year with its Child Care Subsidy campaign. Photo by Kelli McClintock on Unsplash

The reformed childcare subsidy scheme, will see the maximum subsidy changed from 85 per cent to 95 per cent, and the income threshold lifted from $72,000 to $80,000.

Every $5000 earnt above the new threshold will reduce a family’s CCS entitlement by 1 per cent.

Cost of living has increased drastically in recent months and daycare fees have seen an increase of 41 per cent during the past eight years, according to Federal education minster Jason Clare.

“Around 96 per cent of families with children in early education and care will be better off,” Mr Clare said.

“Last year, 73,000 people who wanted to work, didn’t look…because they couldn’t make childcare costs work,” he told reporters last month.

Under the new amendments, savings could be in the hundreds per week for families – depending on their circumstances.

Families with a combined adjustable income of $80,000 would get 90 per cent of their fees covered, those earning $90,000 combined would receive an 88 per cent discount, and couples scraping in $100,000 would receive 86 per cent of their day-care fees subsidised.

Opposition finance spokeswoman Jane Hume claimed that the government needed to reign in spending to curb high inflation following the central bank’s rate hike.

“We want to make sure that we see a budget that isn’t going to make the inflation situation worse. Getting inflation under control is a team sport” she said.

Making childcare more accessible will make life less stressful for families across the nation, according to Treasurer Jim Chalmers.

“What we’ve tried to do is to provide cost of living relief in a number of areas so that we can make things a little bit easier,” he told reporters last month.

“Cheaper childcare will make life easier for a lot of families in a way that doesn’t add substantially to the inflation challenge in our economy.”