By Monica Kotwani, Channel NewsAsia, 23 Jan
From April, 120,000 households with young children will benefit from a new subsidy framework aimed at making childcare and infant care more affordable.
Acting Minister for Social and Family Development Chan Chun Sing announced the new framework after a visit to YWCA Child Development Centre on Wednesday.
All parents will continue to receive a basic subsidy of S$300 a month for childcare and S$600 for infant care services.
Eligible families using full-day programmes will see an increase in their current child care subsidies of at least S$100 and infant care subsidies of at least S$200, with lower-income families receiving more.
The final maximum total subsidy could be as high as S$740 for full-day childcare, and S$1,140 for full day infant care programmes. However, they are subject to a minimum co-payment sum that parents must pay out-of-pocket.
For example, a lower-income household with a monthly income of S$2,500 and below will get an extra S$440 for a basic full-day childcare programme. This will bring its total subsidy to S$740, subject to a minimum co-payment by parents.
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The additional subsidy will replace the Centre-Based Financial Assistance Scheme for Child Care (CFAC), which provides child care-related financial assistance for families earning S$3,500 and below.
The additional subsidy will replace the Centre-Based Financial Assistance Scheme for Child Care (CFAC), which provides child care-related financial assistance for families earning S$3,500 and below.
Up to two-thirds of households will benefit.
Mr Chan said this will mean more affordable access to childcare for the low and middle income households.
He said: "Those at the lowest income bracket may be able to have access to childcare for as low as a few dollars a month. In general, every family will spend [around] three to seven per cent of their household income on childcare fees, and this would put us in the top half of the OECD (Organisation for Economic Co-operation and Development) affordability index."
Mr Chan said the subsidies will cover a large part of costs, as the median cost of a full-day childcare programme in an HDB estate is about S$615.
Families that exceed the monthly household income of S$7,500, can still apply for additional subsidies based on their household's per capita income.
This will be determined by calculating the gross monthly income for the household, and divided by the number of family members living in the household.
Lower-income families earning S$3,500 or less can also apply for the S$1,000 start-up grant, which can be used to cover initial costs of placing a child in the centre -- for example, paying a deposit, registration fees and uniforms.
The new subsidies come after other measures were announced on Monday as part of the government's Marriage and Parenthood Package. These include bigger and more generous baby bonuses as well as paternity leave.
As for concerns that higher subsidies would result in childcare operators increasing fees, Mr Chan said this would be closely monitored.
He said: "This risk will be much higher if we have applied a universal subsidy across the board. We are really focusing the help on lower- to middle-income families, and the risk of childcare operators raising prices universally is mitigated.
"On top of that, the other ways we can manage the price rise are through attracting better quality anchor operators, which I will announce in the second quarter of this year, and also to look at the kind of quality programs that they conduct. We will also be expanding the number of centres and increase the pool of teachers available in the sector."
The new subsidy framework will increase the government's investment in child and infant care by S$105 million and bring the total budget for government spending in this area to about S$360 million for financial year 2013. This will come into effect from April 1.