Sussan Ley (Farrer, Liberal Party, Shadow Minister for Childcare and Early Childhood Learning) Share this | Link to this | Hansard source

by leave—I move opposition amendments (1) and (2) circulated in my name:

(1) Schedule 1, item 15, page 7 (lines 29 to 31), omit subsection (4), substitute:

(4) The Secretary may require only financial information that:

(a) is of a kind listed in section 219GAA; and

(b) relates to any of the 5 financial years immediately preceding the date of the notice.

(2) Schedule 1, item 15, page 8 (after line 15), after section 219GA, insert:

219GAA Financial information that may be required

The following kinds of financial information may be required under section 219GA:

(a) a statement of comprehensive income, profit and loss statement or statement of financial performance;

(b) a statement of financial position or balance sheet;

(c) a statement of cash flows;

(d) notes to the accounts;

(e) information relating to material (that is, greater than 10%) changes to the financial situation over a reporting period;

(f) information relating to breaches of debt covenants;

(g) information relating to ownership and organisational structure;

(h) information relating to sale or closure of child care services;

(i) information relating to plans to purchase new child care services;

(j) whether in the past 12 months any director was subject to personal bankruptcy proceedings or was a director of a company subject to insolvency proceedings;

(k) whether the operator has guaranteed the debts of another organisation in the past 12 months.

The coalition accepts that this bill will pass and that the department will seek financial information from 25 of Australia's largest childcare providers. As I said in my speech in the second reading debate, I think this is a piece of nonsense. I do not really think it is even about the collapse of ABC Learning. I think it is the government taking a swipe at the private provision of child care. It is about a Labor government that cannot help itself from taxing, spending and interfering, and this is a major interference sort of bill. Having said that, we do accept that the bill will pass. But I really take exception to the types of information that this bill allows the Department of Education, Employment and Workplace Relations to ask of those 25 large private providers of child care. We believe that the financial statements, reports and information outlined in our amendments provide ample evidence of a business's financial viability. Our concern is that, given the power to acquire additional information at will, the department may well exceed the mandate intended by this bill. So in our amendments we are specifying the actual information that the department may view from the childcare provider. We could decrease the administrative burden on the centres that could eventuate should these amendments be rejected. I remind the House that childcare centres are accountable to shareholders, boards and owners. Annual reports are compiled, accountants employed and businesses advised on their own viability. ASIC already provides stringent requirements for companies, very clearly outlining the obligations of directors. Where a director is in breach of his or her obligations in this role, then action can be taken. Where a centre is not viable, action would and should be taken by the organisation to rectify the situation. It is ridiculous that we would expect the government to step into this role.

There were a range of comments opposite that rang alarm bells to me, particularly the member for Robertson who said this bill was about taking aim at profiteering and unacceptable risks, as if those who provide private child care—if let get out of hand—would outrageously profiteer and take risks that they should not take. Members opposite have said that this will make centres accountable for their financial decisions—they are already accountable, as I have outlined.

The minister has mentioned the regulatory impact statement, which I have looked at in detail, and there was a long and complicated consultation process leading up to this. There is a national quality framework—I have had a lot to say about that on other occasions and I will again—but of that large allocation of, I think, $270 million, $1.9 million has been aside. If we create an inspectorate within the department, its job will be to assess the viability of new providers. Presumably this new allocation of funding is to employ new public servants. I do not mind new jobs but new jobs have to be productive, valuable and meaningful. I do not think anybody who moves into such a job would say, 'Everything's going well; we have the checks and balances in place—we don't need to be here.' No. Armed with clipboard, information, ratios, statistics and a questionnaire that is actually quite intrusive and insulting to providers, this new inspectorate would seek to gain information that it has not right to gain.

Having looked at the regulation impact statement, I then also talked to some of the stakeholders. I do not believe it is the case that everyone is quite relaxed about this. Many of them have said to me, 'We have so many other problems in the childcare sector at the moment and they relate directly to affordable child care.' I guess for some of us this is just one more burden. You cannot have a new initiative without a new framework, so the department employed McGrathNicol and they have provided a weighty document titled A framework to assess the financial viability of large long day care providers. In it they talk about the ratios that we, in our amendment, will limit the department to in terms of its requests. What is particularly alarming is that part of what the minister proposes is an operational organisational questionnaire. This is qualitative information, not quantitative. (Extension of time granted) The questionnaire of which I speak seeks information from long day care providers such as the following:

Please provide a diagram illustrating the ownership structure of your organisation and a detailed description.

I guess you would think that was fine.

Has the provider sold any services? List the names of the services, their addresses, the number of places provided, where they were operating, when, the reason why the services were closed, which organisations bought these services? Does the provider have plans to purchase new services over the next 12 months? If so, please list the name of the services et cetera. Does the provider have any other significant business activities outside the operation of childcare centres? If so, what percentage does revenue from childcare activities constitute your organisation's total income?

I have just pulled out four or five questions from this document. I think it is outrageous that middle-level bureaucrats—God love them!—in a public service department should be sent by their minister on a fishing expedition to childcare providers who, by virtue of the fact that they are the 25 largest providers in the country, will be doing this stuff to death.

We know the requirements that ASIC places on organisations. We know that the accountability is extreme. Why we would therefore need ratios to be calculated, qualitative data to be collected, a new section in the department to be created—all for what? There are so many more good uses to which we could put this $1.9 million of funding. The minister said the stakeholders are relaxed. In the consultation, they did not really indicate that they were relaxed. Some of them—and I quote from her own statement—said they were 'concerned about the confidentiality of information provided to the department in accordance with the proposed framework'. The information is actually none of the department's business.

Remember, if you are entitled to receive childcare benefit assistance from the Commonwealth, you already have to demonstrate your financial viability. You already have to provide significant information. You have to provide weekly occupancy data, for goodness sake. As if the department could not look at that and say, 'Perhaps there's something not right happening here concerning your financial viability.'

Providers have not said it is fine. My interpretation of their response—and remember, we are only talking about the top 25—is, 'We have so much else on our plate; I guess we will have to deal with this as well.' But it will cost providers. Why should a small business have to come up with information that is totally unrelated to its activities when it has already satisfied stringency requirements, when it has already provided this type of information over and over again and it is in the public domain? Why should they have to do this?

I might add that some providers have commented that had this framework existed prior to the collapse of ABC Learning it would not have captured the financial viability risk of that organisation in advance. People in the department do not have the skills to calculate the financial ratios and determine risks. Presumably that will be outsourced. What starts off as a small section—$1.9 million, a few people—could grow. It will be the easiest thing in the world for this particular framework to be extended to every childcare provider, so that small providers will also be caught up in it. If you are talking about the risk of becoming unviable, and you are targeting that risk, why would you target the risk of somebody in a big way and not somebody in a small way? If that is the premise you are coming from, why would you not ask: is somebody who has just set up one or two centres—perhaps a sole trader or a partnership operation—not more likely to encounter problems than a large provider? Are they not more likely therefore to close their doors?

The minister and other speakers have talked continually about parents coming to the centre in the morning and the doors being closed, as if that tragedy, in some respects, is somehow connected to the substance of this bill. It is not.

I urge all members of this House to support my amendments, which list, specifically, the information that the department may ask for. As I have said, this bill is a waste of everyone's time. We accept that it is going to be passed but we do say that the information should be restricted to financial information and should be restricted to the financial information detailed in the amendments. There are the usual statements you would expect to see—profit and loss accounts, cash flows, notes to the accounts and various other pieces of information. (Time expired)

Kate Ellis (Adelaide, Australian Labor Party, Minister for Employment Participation and Childcare) Share this | Link to this | Hansard source

The government will not be supporting these amendments. I take this opportunity to outline the reasons and also to correct some of the ridiculous misinformation that has been thrown about this chamber. First of all, the opposition have just committed some pretty basic errors, indicating that they have a very poor understanding of what these measures are actually meant to do. The first mistake was when the member for Farrer repeatedly said that these measures would affect the 25 largest childcare providers in Australia. That is not what these measures do. In fact, the bill says very specifically and particularly that these measures will be aimed at large long day care providers who have more than 25 services. At the moment, that is six providers across the nation. So let us just make sure we have our facts right when debating this important legislation.

The other thing we have heard is a scare campaign that it would be so easy for us to just extend this to every childcare centre across Australia. That is absolute rubbish. It would not be so easy because the legislation actually lists who would be impacted by this and to change that we would have to come before this parliament and have another debate and another vote. So let us not run scare campaigns on everything, even though it does seem to be the flavour of the month for the opposition.

This bill is an absolute priority for the government because the government are proud that we are investing some $20 billion of taxpayer funds over the next four years into the Australian childcare system. This is a massive increase on the investments we have seen previously, and it is because we recognise just how important accessible, affordable and quality child care is for Australian families. We want to make sure that it is safe and stable. Obviously there was a huge impact on families, on workers and on the sector when ABC Learning collapsed. We are committed to making sure that does not happen again.

The secretary is already constrained by this bill to requesting information only regarding financial viability. This is already in the legislation. It is not true that the secretary can go on broad fishing expeditions—they are already constrained by the bill before the House. I also note that the financial information listed in this amendment includes the type of financial information that maybe required. We listed those types of information in the explanatory memorandum because this is not an exclusive or exhaustive list and we will not be supporting the amendments to list them in the legislation.

This measure is consistent with similar measures which already exist and operate to assess the financial viability of providers in the vocational education and training area. This is not something new. Instead, this is another example of the opposition saying no—that is all they like to say, with their negativity and opposition for opposition's sake. I commend the bill as it stands. I oppose these amendments and I urge the House to do likewise.

Sussan Ley (Farrer, Liberal Party, Shadow Minister for Childcare and Early Childhood Learning) Share this | Link to this | Hansard source

As I have said, I think the House is wasting its time on the substance of this bill and I do hope that members will support the coalition's amendments. The minister is quite right—it is not 25 centres in total; it is six providers. However, if you think of the number of centres those six providers might have—I am not sure if the minister has that information; her department should certainly have it although they have not provided it to me—that in fact makes the numbers of centres affected quite substantial. If each provider had 25 centres, you can imagine what reach this would have into the childcare sector.

It simply is not the case that the department or the government would not be able to extend the reach of this bill, and I want to mention a couple of other aspects that illustrate the power of the secretary to seek information. Certainly the operator maybe asked for information, but there is also a person who at any time during the year is entitled to seek 15 per cent or more of the dividends. Imagine that person suddenly having to jump through a series of hoops in relation to a facility that they are perhaps only distantly related to. There is a person who at any time during the financial year is owed a debt by the operator, or a person with whom the operator acts or is accustomed to act in concert—and so it goes on. This bill imposes this requirement on not just the operator but a range of organisations, bodies, actors, that in some ways might be quite distantly connected with the operator, certainly in a business sense. They may be close in a personal sense; I do not know. They would also be required to provide information, but what if they do not want to provide that information? What if that information relates to activities that have done nothing to do with the business? According to my reading of this bill, they would still have to give their total financial picture to the department.

I know that we can always be accused of scaremongering, and I know that in a perfect world of course we are not going to have people acting outside the bounds of legislation, but our responsibility is to look at what the legislation empowers people to do and assume that, if it allows for something, then at some stage it may happen. If there is a scoop-up clause that says 'whatever other information may be deemed necessary', it is reasonable to assume that at some stage that clause might be initiated and that officials of the department would be chasing the sort of information that I have described. I come back to the amendments we are moving. There are differences between the coalition and the government on the provision of private child care generally, but on this bill let us put them to one side and say: 'If we accept that you want to do this and spend an initial sum of $1.9 million, which will no doubt escalate over time, on this activity, then please confine your questions to financial data such as we have listed.' The financial data that is in our amendments is quite exclusive. Do not ask for anything else. You will get all the information that you need from what is specifically listed in these amendments.

Remember that there is also a provision in this bill for the department to seek an audit if it finds a problem. We are not touching that provision at all, so it is incorrect for the government to suggest that we would be going soft on anyone who might, for whatever reason, fall through the cracks. As I have said, I do not believe that will ever happen. We are not even suggesting that the audit activity be limited. Leave the audit activity as it is, leave the bill as it is, but when you require information restrict it only to what we have listed in our amendments.

Kate Ellis (Adelaide, Australian Labor Party, Minister for Employment Participation and Childcare) Share this | Link to this | Hansard source

It is outrageous that the opposition should still come into this House and try to downplay the impact that the collapse of ABC Learning had on Australian families, on Australian workers and on the childcare sector. They may be embarrassed that they let the market rip under their government, but we are determined to make sure that it never happens again. We will not accept watering-down this bill through these amendments, and if the opposition are not prepared to get on board and help us protect the Australian childcare industry then I call on them to get out of the way while we do it.

Question put:

That the amendments (Ms Ley’s) be agreed to.

The House divided. [10:55]

(The Speaker—Hon. Harry Jenkins)

Question negatived.