It’s the Budget that just keeps on giving when it comes to bad news.

Family day care services in Victoria have become the latest high-profile victim of cuts from Canberra after Victorian councils warned thousands of families in the state could lose affordable childcare from next year after a fee relief subsidy scheme was slashed.

The Municipal Association of Victoria (MAV) has gone on the warpath over the federal funding reforms that it claims will “dramatically affect Victoria’s Family Day Care (FDC) operators”.

Councils are livid that new eligibility criteria for the Federal Community Support Programme (CSP) that they say was set up to fund Family Day Care operators could cost families an extra $1700 per year in fees for fulltime care.

Family Day Care services are an essential part of the mix for working parents with very young children because they are usually cheaper than larger childcare centres and provide a more homely and intimate service.

“It was understood this change would only affect new FDC providers, not existing operators,” said MAV President Bill McArthur.

“However the Commonwealth has decided to rip out the foundations that underpin the whole family day care system, which is a low blow to current operators, families and the children who will all be affected.”

The MAV claims that from 1st July 2015, the Department of Education will stop all CSP contracts with approved family day care services and that the operators will then need to reapply for federal funding so they can be assessed under tightened eligibility criteria.

The peak body says that approved Family Day Care services will also have their Operational Support Funding capped at just $250,000 a year.

The problem for councils, which often run or coordinate the services, is that the shortfall will come from their pockets, a cost shift many will find very difficult if not impossible to absorb.

“These changes could result in a significant loss of revenue for more than 40 councils if CSP funding is no longer available, as well as potentially reduce the availability of places for families who rely on the service,” Mr McArthur said.

“The MAV has worked hard at supporting councils to remain involved as a public provider of family day care as it offers an affordable, flexible early childhood education and care option for local families.”

A major hit the MAV is telling families to brace for is a reduction of availability of care “in non-core hours” that are used by parents that do shift work – such as nurses   or who simply need respite because of exhaustion.

Mr McArthur said the Commonwealth failed recognise voluntary involvement of local government in family day care which allowed more women to re-enter the workforce, created a business opportunity and extended an affordable care option.

The MAV is also warning that a hit to after school care availability should not be ruled out because FDCs provided services for families with school-aged children.

“This announcement comes on top of uncertainty for 15 hours of kindergarten, with no funding committed by the Commonwealth for operational costs of the additional five hours introduced under national reforms,” Mr McArthur said.

“Current average preschool fees of $1,200 a year could rise by 129 per cent or $1,547 to $2,750 per child if $113 million of federal funding for the additional five hours is not ongoing beyond December 2014.

“A further damaging blow to families is the cut of $57 million to the Commonwealth/State partnership agreement on preventative health, despite being signed to continue until 2018.”

The MAV said that all councils initiatives to reduce lifestyle-related chronic diseases like obesity and diabetes in communities will also be hit by cuts in the Budget, singling out a loss of around $12 million a year to 14 councils that formed sites for the “Healthy Together Communities” initiative.

That cut will hit affect some 100 staff across the Victoria the MAV estimates..

“These preventative programs reduce the future burden on our public health system by improving physical activity and nutrition, with the 14 councils reaching around 1.3 million Victorians through 520 schools, 938 early childhood services and 4,409 medium to large workplaces,” Mr McArthur said.

“The burden being imposed on families through reforms and funding cuts to family day care, kindergarten programs and preventative health are mean spirited and senseless.”