House debates

Wednesday, 4 August 2021

Bills

Family Assistance Legislation Amendment (Child Care Subsidy) Bill 2021; Second Reading

12:47 pm

Photo of Celia HammondCelia Hammond (Curtin, Liberal Party) Share this | Hansard source

I am pleased to speak about the Family Assistance Legislation Amendment (Child Care Subsidy) Bill 2021.

Australian women's labour force participation rates have increased significantly over the last decades. As at March 2021, Australia recorded a high of 61.8 per cent of females aged 15 and over participating in the workforce. In some ways this increase should come as no surprise, as the levels of educational attainment by women have also increased significantly over that time period—so much so that of all women aged between 20 to 24, 92.5 per cent have attained year 12 qualifications or above compared to 87.5 per cent of men in the same age bracket. Of all women aged 25 to 29, 48.3 per cent have achieved a bachelor degree or above compared to 36.1 per cent of similarly aged men. Women represent approximately 58 per cent of domestic students enrolled in universities or other institutions, and this has risen from 57 per cent in 2007.

However, underneath these statistics regarding workforce participation rates is the fact that more females are engaged in part-time employment than their male counterparts. Women comprise 47.2 per cent of all employed persons in Australia; 25 per cent of all employed persons are women working full-time and 21 per cent are women working part-time. Women constitute 37.9 per cent of full-time employees and almost 68 per cent of all part-time employees. For parents whose youngest child was under six, three in five employed mothers worked part-time compared to less than one in 10 employed fathers. For parents whose youngest child was aged between six and 14 years, close to half of all the employed mothers worked part-time compared to less than one in 10 employed fathers.

Over the last decade there have been numerous studies and reports highlighting that the increasing female workforce participation rate is one of the biggest economic opportunities for governments. Indeed, the recent Intergenerational report highlighted this as an important element in increasing our productivity levels as a country as we face an ageing and smaller population. At the same time, and running alongside the above studies, there are a number of studies and reports which provide economic arguments for supporting and encouraging parents to stay at home. I don't seek to get into the economic debate on this—I acknowledge that there are valid arguments raised from different sides of this discussion and analysis—nor do I seek to get into the cultural debate on whether having one parent at home or having two parents working is a better societal choice than the other. Parents and families have the right and the responsibility to make that decision for themselves. There is no one-size-fits-all model.

My key concern with respect to the above statistics on female participation in the labour force is that they are not the result of true choice or true opportunity. The decision to work or not work, or indeed how much to work, is influenced by a number of hurdles and barriers, one of which is the cost and availability of child care. Numerous surveys have shown that, among mothers who have young children and would like to work more hours, child care is a significant, if not the most significant, barrier. A recent survey shows that two-thirds say they are prevented from working more by lack of child care. Half say the main reason is the cost of child care and about 45 per cent of mothers say they would work more hours if child care were more affordable. If working an additional day leads to no or virtually no more take-home pay, this is not real choice and this is not real opportunity. It is, in fact, a disincentive.

The Family Assistance Legislation Amendment (Child Care Subsidy) Bill 2021, before parliament today, gives effect to the Australian government's commitment to make child care more affordable for the families who need it most and provides additional support to all CCS-eligible Australian families with more than one child aged under six in child care. The two main changes introduced under this bill will see, from July 2022, an increase to the subsidy and the removal of the cap. With respect to the subsidy, families with more than one child in child care will see their level of subsidy increase 30 percentage points to a maximum subsidy of 95 per cent of fees paid for their second and subsequent children. Around 50 per cent of families who benefit from the measure, those earning less than about $130,000 a year, will receive the maximum 95 per cent subsidy for their second and subsequent children. Around 95 per cent of families who benefit from the measure will receive a subsidy of at least 80 per cent for their second and subsequent children. These changes will benefit around 250,000 Australian families and will benefit those who need it most. Those on the lowest incomes will continue to receive the highest rate of subsidy.

Also, this bill will remove the $10,560 annual cap on the childcare subsidy for families earning over $189,390, benefitting around 18,000 families. The annual cap can create a disincentive for increased workforce participation. Once a family hits the annual cap, they are required to pay 100 per cent of the childcare fees. This results in a large ineffective marginal tax rate and the possibility of significant debts should they estimate their income incorrectly, even by small amounts. Not removing the annual cap will maintain, and in some cases increase, workforce disincentives where a family has combined income over $189,390. This would negate any extra benefit generated by the increased subsidy.

By way of finishing, the highest childcare costs are borne by families with multiple children. This can be a significant barrier preventing parents, particularly second-income earners, who are primarily women, from re-entering the workforce or increasing their participation. A family with more than one child aged under six can double or triple their costs. This could mean that the second income earner is losing most or all of their income, delaying their return to work or ability to take on an increased number of hours until children attend school. Reducing out-of-pocket costs for families with multiple children will support greater choice and greater opportunity for these parents' participation in the workforce. This measure reduces workforce disincentives for families and encourages parents, especially second-income earners, who are more often women, to go back to work or to work more if they choose to do so.

Comments

No comments