Prime Minister Scott Morrison said on Thursday one million families would benefit from the subsidies expected to cost 1.6 billion Australian dollars ($973 million) over three months.
Parents are increasingly keeping children home from schools and child care centers due to the risk of COVID-19 and several child care centers have closed their doors due to dwindling revenue.
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The government insists that the children remain safer in schools than they are outside, despite some experts disagreeing. Morrison does not want parents forced to give up jobs to care for children.
Morrison told reporters: "If you have a job in this economy, it's an essential job."