Jennie George (Throsby, Australian Labor Party, Shadow Parliamentary Secretary for Environment and Heritage) Share this | Hansard source

As other contributors to this debate have pointed out, the centrepiece of the Family Assistance Legislation Amendment (Child Care Management System and Other Measures) Bill 2007 is the creation of a new online based childcare management system. This national childcare computer system should ultimately improve the supply of information and accountability across the childcare sector, but, as others on my side have pointed out, the system is not without some problems—and I will address some of those later in my contribution.

It is a very significant change in the administration of the childcare benefit, and, through this system, the relationship between government and childcare service operators will also change. On the most recent data available, we see that over one million children now use approved child care, with more than 700,000 families now receiving childcare benefits in respect of child care provided by approved services. There are currently about 10½ thousand childcare services approved for childcare benefit purposes, and all of these approved services will be affected by the introduction of this new management system. The major changes that are incorporated in this bill include the weekly payment of childcare benefit in arrears; the calculation of each family’s childcare benefit entitlement, which is to be done by FaCSIA and provided to the operator, rather than the operators calculating the childcare benefit, as in the current system; having enrolment advances, which will be payable for each new enrollee to help operators with cash flow; and, in future, having all communication of information done electronically.

Examining the arguments outlined in the explanatory memorandum, obviously the benefits to government include a number of the following things, which other speakers have also commented on. The system should improve the accuracy and timeliness of childcare data, which has been a major problem to date, and should provide greater efficiencies in the administration of the CCB. It will decrease the funds tied up in the current advance-acquit cycle by moving to a weekly arrears payment model, which might be good from the government’s perspective but certainly not so welcome by many of the operators in the sector. It will, we hope, reduce any financial impacts from incorrect claims due to error or fraud and align payments with FaCSIA’s increased compliance roles. It will ensure that the operational functions of the Family Assistance Office and FaCSIA are aligned with their departmental responsibilities. It will enable a significant amount of childcare related information and data to be held by one central agency, hopefully improving the reporting ability of FaCSIA and, all in all, it will generate administrative savings for the government. But, on the reverse side of the coin, various stakeholders will face many financial and non-financial negative consequences. I want to refer to some of the downsides of the proposals contained in the bill.

First of all, childcare services will be required to purchase and maintain new or upgraded software and possibly even newer, upgraded hardware and to set up and maintain internet access. For a lot of operators, particularly in the corporate, for-profit sector, this will not be a problem. But for the smaller business operations and the not-for-profit sector, I think some of the costs associated with the transition to the new program need to be given further consideration by government. Revised administrative processes will need to be developed and implemented in many of our childcare services. This will include, of necessity, the training of staff on new or upgraded software and training in the more frequent reporting requirements that the new system will require.

A third area of concern that has been identified by some in the sector is that services will no longer be paid advances, which are currently paid monthly. Services that currently use these advance funds to smooth their cash flows across the month will no longer be able to do so. This cost will be mitigated to some extent by the enrolment amount, which will operate like a float paid in respect of each child enrolled at the service. Nevertheless, it could have some significant financial consequences—again, for the small, not-for-profit operators in the sector.

A number of the concerns about the system were identified by the government in the consultation phase, and it does appear on my reading of the bill that some proposals have been modified in response to the concerns that have been raised. However, I believe that the legislation does warrant further detailed consideration in the Senate. Some of the particular issues that I think need to be further looked at include, firstly, the requirement that the services report the in and out times for each child for each session of care; secondly, the application of childcare benefit eligibility limits through a first-in, first-served application—and I think that causes some concern for operators in the childcare sector, particularly where families might avail themselves of more than one service in a week—and thirdly, the availability of the childcare benefit percentage. There was a strong preference in the consultation phase by operators for this information to be continued when an enrolment is confirmed to enable services to undertake their own estimates of the reductions. There is also some concern about the policy in relation to absences with the new rule of 42 absent days without an impact on childcare benefit payments.

Others have pointed to the potential administrative load of weekly submission of attendance records, and I do understand that perhaps the detailed requirements that were originally mooted might be now varied to include survey periods during the course of the year, not the actual recording in and out on every day of every week. The payment of enrolment amounts could create complexities, particularly for services like school vacation care, when students might come along for one vacation care session but not attend the next so they have to be continually re-enrolled. The childcare operators also raised issues relating to the security and confidentiality of the information provided on the central computer system. And, rightly, they raised too concerns about the nature of the support services that will be provided in the transition period and the cost that this might involve.

So while supporting the bill in general I would refer again to the proposal that the matter should be given further detailed consideration by a Senate legislation inquiry so that we can hear further the views of childcare operators on the impact of the proposed changes to the administration of the childcare benefit scheme, the new online system and the penalty regime that will apply in future.

I understand that this new system has been undertaken on the basis that it will complement the childcare compliance strategy that was announced in the budget last year. We have no objection in principle to protecting the integrity of payments made in support of families using child care. In the minister’s second reading speech he said:

In combination with the new CCMS, the new compliance measures will help to minimise the risk of incorrect payments and fraud, and to detect them as soon as possible should they occur. They will also help to increase services’ awareness of their obligations and the consequences of non-compliance with their obligations.

The bill for the first time also introduces the notion of a civil penalties scheme. Under the proposal there would be the imposition of a financial penalty on a service that contravened a civil penalty provision and, specifically, the provision that there will be an obligation on a service to provide information to the childcare access hotline. The scheme will operate with an infringement notice proposal which would provide a childcare service operator with an option of either paying the penalty at a lesser financial amount or proceeding to litigation on the issue. I agreed with the minister when he said:

Families are entitled to know if the service’s approval is under threat or terminated because their childcare benefit may stop and they may become as parents liable for full fees.

I think that statement made by the minister is unexceptional, but in my opinion, and it is something I would ask the minister to give further consideration to, there should be an obligation on childcare service providers also to ensure that they are complying with the law as determined by this parliament and that they are complying with industrial instruments that apply to the workforce before those services are approved as being eligible for childcare benefit fee subsidies.

I draw the minister’s attention to a local case study to highlight the point I am making—and I see the minister and the Assistant Treasurer both at the table. Today I have written to the Assistant Treasurer because I have had no satisfaction through the ATO to date on this particular case. I repeat for the minister: I think that in future consideration of amendments to the legislation there should be an obligation on childcare services to ensure that they are complying with the law and with the industrial instruments.

In my own area the Wilbur Childcare service operates eight local childcare centres. For some months local union organisers had been pursuing complaints raised by staff in relation to payment of wages and superannuation entitlements. The ongoing problems were reported in our local media outlets in March this year. The owner was advised by the organiser of the particularly union that covers the staff that the staff complained of ‘incorrect or non payment’—of wages—‘at all and dishonoured cheques’ as well as salary payments being made out in the name of the various companies with which the owner is associated. Further in the correspondence received by me the organiser of the union points out that ‘superannuation has not been paid for some time and that individual members were asked’—by the union—‘to notify the ATO’ of that particular issue.

Our local newspaper, the Illawarra Mercury, reported on one individual case before the Industrial Relations Commission involving the Wilbur Childcare centres. It involved a trainee who alleged underpayment of wages and entitlements at one of these centres in Moruya, which closed in November 2006. The union’s lawyer said:

... discrepancies in the trainees pay began to appear shortly after she started work at the beginning of 2006. What confused the situation greatly was infrequent payments, payments on different days, at different intervals made it difficult for the employee concerned to gauge whether correct payments were made or not.

The union’s lawyer claimed that when the centre closed in November the trainee was ‘not paid her entitlements and had been left without seven weeks pay’. After negotiations the owner had offered to pay the trainee $3,000 in April; however, only $1,000 was deposited into her account. This one case that I have referred to, and it was reported in our media, appears to be symptomatic of the problems facing staff at a number of Wilbur Childcare centres.

The union and individual constituents have now raised their concerns with me and sought my assistance to pursue their cases through the ATO in relation to their superannuation entitlements and salary payments. In April 2007, in response to my representations, I was advised that the ATO was ‘pursuing the matter actively’ but that no further details could be provided either to me or to the individual constituents. It is now June 2007, Minister, and it appears that the matters of concern have still not been resolved. I have today pursued the issues in written correspondence to the Assistant Treasurer. These childcare workers are being denied their legitimate and legislated superannuation entitlements and their employer appears to regularly breach their award conditions. As well as these industrial breaches, the minister should be aware that I have seen a copy of a letter of complaint sent to the National Childcare Accreditation Council which listed serious matters of concern including:

... special accreditation staff were brought in at every Centre for accreditation that do not normally work at the Centre.

I understand that the National Childcare Accreditation Council has informed the licensee of Wilbur Childcare centres of the issues of concern raised in that correspondence and advised them:

... to provide a written response to the National Childcare Accreditation Council which adequately and appropriately addresses each area of concern.

The lessons that I draw from this, Minister, are the following. First of all, the ATO needs enhanced powers and greater accountability in ensuring more vigorous and rigorous enforcement of superannuation contribution payments. After all, those payments have been legislated by the national parliament and to not pay them is, in my view, a breach of the law and something ought to be done about it. The second point I draw out from this case study is in relation to childcare services that wish to offer child care that attracts childcare benefit fee subsidies for families. As we know, these services must be approved. In my view, such approval in future should be dependent on the service complying with their legal obligations and their statutory obligations, including prescribed payment of superannuation, proper taxation remittance and compliance with relevant industrial instruments. The bill before us does not go as far as the recommendation I am making but I think it is certainly worthy of the minister’s consideration. If service operators expect to be given financial assistance by the federal government then I do not think it is too much to ask that those services also comply with other pieces of legislation.

In the time available I have raised the general matters that I wanted to pursue in relation to the childcare management system bill. As I said earlier, it is a system that ultimately should provide the government with a better supply of information and enable better accountability across the childcare sector. It is not without some problems, and I think those have been identified by a range of operators in the sector. I hope there will be an opportunity for some detailed consideration when the matter goes to the Senate. I think it is incumbent upon the government to address the problems, particularly as they always say that they do not believe in a one-size-fits-all solution. I think there are some requirements of the new system which might have negative consequences for the small business operators and the not-for-profit operators in the childcare sector. While we support the main principles outlined in the legislation, the shadow minister has moved a comprehensive amendment to the bill which points out some of the inadequacies in the handling of the childcare issue by this government, and those matters in the amendment go to the critical issues of affordability, accessibility and quality of childcare services. I think the shadow minister has outlined the scope of our concerns with regard to those areas. I encourage the minister to give further consideration to the matters I have raised, and I am hoping the Assistant Treasurer will assist me in my endeavours to ensure that workers receive their just and legislated superannuation entitlements.

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