Simon Birmingham (SA, Liberal Party, Minister for Education and Training) Share this | Hansard source

I thank all contributors to the debate on the Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Bill 2016. I am particularly honoured to be able to close this second reading debate on what is a very important and significant piece of policy reform that will make childcare and early education services in Australia more affordable for the vast majority of Australian families, and certainly for low-income, hardworking Australian families; and for middle-income families. It is a substantial reform that will improve their ability to juggle work and family responsibilities, and choose to work the hours that best suit them in the circumstances that best suit them.

This bill brings on major reforms. The childcare package contained in this bill has been before not one or two but three Senate inquiries, as well as of course a comprehensive Productivity Commission analysis that preceded it. I thank the Senate Education and Employment Legislation Committee and the Senate Community Affairs Legislation Committee, as well as all those who contributed to those inquiries. The government welcomes and accepts the recommendation from each of the majority reports that the bill be passed. I would also like to particularly thank Senators McKenzie and Duniam for so ably chairing successive inquiries on this bill.

We are committed to investing in child care to provide parents with more choice and opportunity to work, and to provide children with high-quality early education. That is why these measures come with an additional cost to the budget in excess of $1½ billion. That is a significant cost, and the government has worked hard to ensure that it is fully funded within the budget so that it is achieved without needing to drive up taxes or debt for future generations.

This bill delivers genuine, much-needed reforms for a simpler, more affordable, more accessible and more flexible early education and childcare system. Around one million Australian families who are balancing work and parental responsibilities will find this package to be fairer and beneficial to them, providing the greatest hours of support to the families who are working the longest hours, and the greatest financial support to the families who are earning the least.

Our reforms give hardworking lower income families an increase in their effective rate of subsidy on their childcare costs from around 72 per cent to 85 per cent. This tapers down to 80 per cent for higher income families. A family earning only around $60,000 a year whose childcare centre charges around $100 a day would pay just $15 per day for the care of their child, and with just one child in child care would be around $2,000 per annum better off as a result of the proposals the Turnbull government is putting forward. Families earning $60,000, $70,000 or $80,000 per annum, hardworking families, will find they are all significant beneficiaries of these changes.

Family eligibility for the childcare subsidy is determined by a three-step activity test that more closely aligns hours of subsidised care with the combined amounts of work, training, study, volunteering or other recognised activity undertaken. This is an important part of the reform that was recommended through the Productivity Commission process, and it ensures that the greatest number of hours of support go to those families who are working, studying or volunteering the longest number of hours in their lives. It is estimated that our reforms will encourage more than 230,000 families to increase their involvement in paid employment. 'Why is that?' I heard Senator Bilyk ask before. It is because, importantly, either they will find that they have less out-of-pocket costs when it comes to meeting their childcare bills, or they will find that they no longer hit a $7½ thousand cap in terms of their annual support—or indeed they may well benefit in many cases from both of those reforms. It means that childcare costs for low-income, hard-working families are no longer a barrier to their employment participation or a limit on the number of hours that they work.

New data released earlier this week show that there are nearly 18,000 approved childcare services nationwide caring for roughly 1.25 million children. But the data also illustrate significant flaws in the system. We saw in June 2016 an annual quarter fee spike of almost eight per cent. While the Turnbull government have done much to try to reduce fees in the current system and have succeeded in keeping fee increases lower than they were during the previous government's time in office, it is clear that we need changes to address these fee increases.

Our reforms will place downward pressure on what have been incessant childcare fee increases through an hourly rate cap, as well as abolishing the current childcare rebate cap for most families and increasing it from $7½ thousand to $10,000 for higher income families above $185,000. We will introduce new compliance powers to further strengthen the government's efforts to clamp down on fraud—which I note Senator Bernardi acknowledged in his contribution—provide a childcare safety net for the most vulnerable children and slash red tape so that services can offer more flexible hours.

Our package also includes a number of other important measures that are not formally part of the legislation. This includes the Community Child Care Fund, which will help new and existing services, particularly in rural, regional or vulnerable communities, to increase the supply of places in areas of high or unmet demand. Much has been said in the House of Representatives debate and in the Senate inquiry and debate about budget based funded services, otherwise known as BBFs, under this package. There are 300 BBF services nationwide caring for about 22,000 children. Amongst those are around 5,000 children in about 45 mobile services. It is very important to stress that the BBF Program is not a legislated program. It is a budget measure. Each of these services operates under vastly different arrangements at present in terms of the way in which subsidies are paid to it. That is one of the reasons why it is not a legislated program—because of course each of those payments has been structured over a historical period to reflect the different natures of those very different services.

In order to address concerns with the current block funded program, which is capped and closed and has been a problem for some time, this package will bring those budget based funded services that are delivering child care into the broader funding model for the first time. That means that, for the first time ever, families using these services will receive direct support from the Australian government through the new childcare subsidy or, for those requiring extra support, through the additional childcare subsidy. I again stress that those families at present are not eligible, as BBF families, for the childcare benefit or the childcare rebate. They will be eligible for the first time ever for the new childcare subsidy and the additional childcare subsidy.

Recognising that many of these services go to great and costly lengths to operate in isolated communities and to travel to small communities with limited numbers of children, our third funding source for BBFs, including mobile and Indigenous services, is the Community Child Care Fund, which is an annual fund of $110 million. However, we acknowledge that there have been concerns about accessing this fund from BBFs, whose current budget funding is $61.8 million. As a result of representations made by many—Senator Nick Xenophon and his team, Senator Hanson and her team, Senator Hinch and my own colleagues the member for Farrer, Ms Ley, Senator McKenzie and many others—I acknowledge indeed that during this debate and other previous discussions, as I said before, these issues have been raised comprehensively. They have been raised by the Greens and by Labor. They have been mentioned in many different quarters.

As a result of those representations from many different places, the government is committing that $61.8 million of that fund—exactly the same amount of funding as is currently provided to BBFs—will be quarantined as a supplementary funding stream to BBFs that can receive that support in order to remain viable without it being contestable funding as the CCCF had originally been intended. This provides a guaranteed level of funding equal to—and indexed into the future—existing funding to BBFs. That means that the BBFs will attract—guaranteed—more funding under this package because, in addition to that stream of funding under the Community Child Care Fund, they will still have the new eligibility for the childcare subsidy and for the additional childcare subsidy. Put together, this guarantees nothing but being better off for those BBF services into the future.

I thank those who have made arguments in favour of taking action in this place. The government has listened to the need to provide certainty. To provide further certainty, I can assure the Senate that BBFs will benefit not from annual arrangements under this but from longer term grants of between three and five years which will be renewable. Great care has been taken to ensure that we can ensure accurate support to each of them under the childcare reforms, including service based reports for each individual service that have been developed by PwC. This careful work will continue after the bill has been passed, particularly with regard to further consultation on the guidelines governing the Community Child Care Fund, which will be published by July 2017. We will also examine this program, along with every other provision of the bill, as part of the post-implementation review scheduled to commence within one year of implementation.

I stress that the remaining funds in relation to the Community Child Care Fund will be able to be used to see expansion in terms of new services. So BBFs will no longer find themselves capped in terms of their numbers, places or dollars, as those will increase under the childcare subsidy and additional childcare subsidy with each new young Indigenous child, remote or regional child or other eligible child they have in their service. Their funds will go up, unlike the current capped arrangement, and of course they can choose to expand their services. The Community Child Care Fund will provide opportunity for expansion of similar services in localities that have not been able to access such support because of the closed and capped nature of the BBF Program previously. These are changes that I hope will be welcomed by all senators and will allay fears in relation to the future of those BBF services.

Much has also been said about the provision of minimum hours under the Child Care Safety Net. As noted earlier, an activity test has been incorporated into this package in order to ensure childcare subsidies are targeted to those who work the hardest and depend upon child care in order to work, train, study or volunteer. The activity test is light touch. It starts at requiring just four hours of activity a week and scales up from there, as I said before, in order to ensure that those working the longest hours are able to access the greatest hours of subsidised care.

We know children from disadvantaged backgrounds benefit most from quality early childhood education and care, which is why we are providing additional support to those who need it most. The Child Care Safety Net will support families earning around $65,000 or less who do not meet the light-touch activity test, by providing up to 24 hours per fortnight of subsidised care. This is equivalent to two weekly six-hour sessions and will be provided at the highest rate of subsidy for these families, which I again note increases from the 72 per cent support that they would receive at present to 85 per cent support under our reforms.

I say it provides two sessions per week because, remember, these are families who are not working, not studying, not volunteering, not meeting the activity test. They do not need day-long sessions of care like those who might be engaged in the workforce. They need sessions of care to meet early education opportunities, and early education opportunities should be provided within a reasonable window of time. The government believes that six hours provides that capacity. It is consistent with the type of timelines that preschool services provide in terms of opportunities for early education. It is broadly consistent with the length of time that children spend at school during a school day, so it is not unreasonable to believe that early educational opportunities can and should be provided to these children for six hours a day, guaranteeing two sessions of care.

I have heard a range of different examples from others talking about the activity test and I want to touch on a couple of those quickly. Senator Hanson-Young spoke about jobseekers—people who lose a job—and whether that means they will lose access to childcare services. People who go onto Newstart, of course, have mutual service obligations in terms of looking for work. Looking for work is an eligible activity under the activity test. Those people will not lose their eligibility for childcare services. They will continue to be eligible because they will be meeting the activity test in the future.

I have heard much said about children who are at risk. The additional childcare subsidy component we are providing guarantees access for children at risk, not just people identified in a child protection service at a state level but, indeed, for interventions before children enter such higher levels of risk. There are clear processes there which services themselves can identify and commence to guarantee that those children receive access to 50 hours per week of childcare support and that that 50 hours per week is paid not at a proportion but, indeed, at the full cost of delivery for that childcare support. Again, it is a clear, careful thought from the government to make sure the disadvantage has been carefully considered and acknowledged through this process.

The government does encourage and expect services to provide flexibility for families. The Jobs for Families Child Care Package does not include any requirements for services to alter their charging practices or how they deliver their sessions of care, but we do and we are lifting a number of requirements from them. Services are currently required to operate a set number of hours per day and a set number of days per week. Those regulations will be lifted, which will enable in regional or rural communities more services to operate in a flexible way that meets the demand in those communities. It will also enable services to tailor specific packages for people to access early education services under the safety net if they have the entitlement to those two six-hour sessions per week. These services and this access, of course, comes in addition to access to preschool services that the government supports with the states and territories and ensures universality of early education access at that level.

Some services, to their credit, already offer shorter sessions of care or casual places, and the changes we are making will make it even easier for more services to follow suit in that regard. Offering more flexible options is especially important for those vulnerable families, and I urge services to do so and note that there are a range of different provisions within the minister's rules that can be applicable to make sure that that is the case if necessary in the future.

I want to thank those who have preceded me in responsibilities in the childcare portfolio for their contributions to the development of this work. The members for Farrer and Cook, of course, oversaw different stages of the development of this policy work, but I am very pleased to bring to the chamber tonight and to bring to a vote tonight reforms that will provide enormous benefits to around one million Australian families—families who will see greater support in terms of their childcare costs in the future. They will no longer be crippled by an annual cap or cliff that they fall off of each year. They will see a new mechanism in place to constrain incessant fee growth. They will be empowered to make choices about how and when they work and the hours they work without fear of crippling childcare costs.

These are important reforms. They are going to make a very big difference to help hardworking Australian families. They are going to make our system of childcare payments and benefits far more effective in future. I endorse them to the Senate and hope that all senators can see the merit in the overwhelming elements of this package that benefit hardworking low- and middle-income Australian families.

Question agreed to.

Bill read a second time.