Wednesday, 18 June 2014
Family Assistance Legislation Amendment (Child Care Measures) Bill 2014; Second Reading
Our population is changing. There are more older people than before. Baby boomers have started to retire, and people are living longer. It is all good news. One consequence of those changes is that Australia needs workers. Among others, we need people in their 20s, 30s, and 40s to have every opportunity to participate in our workforce. We need them to use their skills, to develop their skills, to be productive, to pay taxes and to stay in the workforce so that their pay increases, so that their tax payments increase, so that they do not lose their skills, so that they learn, so that they stay connected, so that they can contribute.
One thing our country needs, so that people of parenting age can stay in the workforce, is child care. Child care allows parents to return to work. More than 978,000 families across Australia rely on child care on a daily basis. There are lots of good reasons why a parent might want to return to work—there is the obvious financial benefit of earning a wage, but there are other benefits too. One is that the longer you are away from the workforce, the more likely it is that your skills will become eroded or outdated. That can make it harder to get back into the workforce, and even once you are there it can mean delayed promotion, delayed opportunities for development and lower wages over a lifetime. You can miss opportunities for promotion that you would have had, had you had a shorter absence from the workforce.
Another reason that people might want to return to work is wellbeing. For a lot of us, our identity is wrapped up in our work. If you have built a successful career, or developed skills, or you have been part of an organisation successfully for a long period of time, your identity can be largely wrapped up in what you do. It can be an opportunity for inclusion, an opportunity for social contact, an opportunity just to have a conversation that is not about nappies or pressing domestic concerns. It can affect your sense of self-worth. For those reasons it is important not just from a national perspective but also from an individual perspective that we remove barriers and impediments to returning to work for people who are parents.
None of this is intended to denigrate or belittle the work of those who choose to remain out of the paid workforce to undertake important parenting responsibilities. Having been both a stay-at-home parent and a principal in a national law firm, I value both roles, and I know that in a lot of ways that stay-at-home parenting work can be tougher and more demanding than returning to a career in the paid workforce. For those who want to return to the paid workforce, our nation should do what it reasonably can to remove any barriers. One aspect of removing barriers is good regulation that allows people to have a job that they can return to, that prevents them from being sacked for taking parental leave, that helps working arrangements to fit around life as a parent and that helps to fight discrimination against parents.
Another aspect is not legislative; it is building a culture where absence from the workforce to have a child is seen as the norm for people of parenting age—in other words, a work culture where work and family fit together and are not in competition with each other, and where people are seen as individuals and parents, not just as workers. Obviously a further aspect is paid parental leave. It takes away some of the pressure of absence and helps reduce disadvantage, and it allows the person taking parental leave to keep in touch with the workplace throughout their absence.
Of course, child care is a very important part of the puzzle. Without child care, returning to work can be just impossible. Australian parents and their kids need quality, accessible and affordable child care. Research shows the relationship between workforce participation for women particularly and the cost of child care. When the gross costs of child care go up by one per cent, women's workforce participation decreases by 0.7 per cent. These are obviously concerning statistics given the imperatives that we have to make sure that our paid workforce base is as big as possible as our population changes and we face the challenges inherent in those changes. Child care is not just important for today's workforce; it is important for our nation's future. It is important to our ability to raise enough revenue to pay for the services that our people need. It is also important for our children's future. Early learning is so significant when it comes to making sure that our children will have the best prospects, the best opportunities and the best future possible.
The reason I made those opening remarks was to explain why I find this bill so disappointing and why I so strongly support the Labor amendment. It is because this bill is aimed at making child care less affordable for parents. The bill will decrease the real value to working families of the child care rebate and the child care benefit. It will do so by freezing indexation not just for the non means tested child care rebate but also for the income thresholds of the means tested child care benefit. It is a cut of $336 million from childcare support that low- and middle-income families in Australia rely on.
It is so ill timed. It comes only weeks before the Productivity Commission inquiry that the government itself instigated is due to provide an interim report. The government should await the Productivity Commission's recommendations and views on child care before altering childcare policy. This is an alteration in policy in that it is aimed at making child care less affordable. Like many other Australians, I made a submission to the Productivity Commission inquiry into child care in good faith, expecting that the government of the day would await its recommendations before making changes to child care. By reducing access to child care and reducing affordability the government is jumping the gun. It should be waiting for the Productivity Commission.
But more important than process issues are substantive issues. The measures in this bill are unprecedented. No government has frozen indexation on the child care rebate without using the proceeds of the savings to help fund child care quality measures by returning the savings to early learning. No government at all has frozen the income thresholds on the child care benefit. These unprecedented measures are greatly disappointing, but sadly this approach is consistent with the Liberal-Nationals' longstanding failure to support accessible, affordable child care.
I remember very well in the late 1990s that one of the first the measures of the newly elected Howard government was to abolish operating subsidies for community childcare centres. In the same year, they reduced the child care cash rebate from 30 per cent to 20 per cent for one-child families with incomes above $70,000 a year. The Howard government just did not get child care. Unfortunately, it is a pattern that is continuing.
In contrast, Labor has an outstanding record on child care. Just last year then Minister Ellis recounted some of our achievements on child care in a speech to the Australian Childcare Alliance. She described some of Labor's achievements and said:
In affordability alone we have seen a massive increase in investment, we have seen an increase in the child care rebate from 30 to 50 percent, we have seen the increase in the cap of the child care rebate from $4,354 a year up to $7,500 per year but importantly they aren't the only statistics that matter.
The statistics that matter is the impact that this increase is having in Australian families. What we do know is that in 2004 when a family was spending on average 13 percent of their disposable income on their childcare fees, that by 2011 that figure stood at 7.5 percent.
So we have seen a reduction in the proportion of disposable income spent on child care. I know that former Prime Minister Kevin Rudd, who was the member for Griffith before my election as the member for Griffith, was very proud of the move to increase the childcare assistance from 30 per cent to 50 per cent. He spoke to me about that change and about the importance of making child care available to working families.
When you look at the history of the coalition's actions and Labor's actions on child care you see the difference. Labor has always believed in and supported workforce participation measures and early learning measures, whereas unfortunately the coalition has not. It is a similar proposition when it comes to paid parental leave. I remember very well when Jenny Macklin was the Deputy Leader of the Australian Labor Party federally and the great pride that I felt as a young member of the Australian Labor Party that she was championing a paid parental leave scheme nationally. At the time, though, unfortunately the Howard government was opposing paid parental leave. Instead, we saw the absolutely flawed policy of the baby bonus—a policy that was widely criticised as an example of poor public policy.
We championed paid parental leave and, once Labor was elected to government, we commissioned a Productivity Commission inquiry and, quite rightly, waited for the outcome of that inquiry. At that point we implemented a paid parental leave scheme consistent, importantly, with the Productivity Commission inquiry recommendations. That was a minimum wage, fixed-amount paid parental leave scheme where everybody would get the same amount. It was a fair scheme, unlike the Abbott government's wholly unfair Paid Parental Leave Scheme where the more well off you are the more money you get from the government. It is frankly ridiculous and repressive.
I know that in this debate there has been a bit of discussion about the priorities in this government's spending when it comes to work and family policies. All I want to say about that is that it is very disappointing that we are seeing a lot of myths being perpetuated in the debate. For example, last night we heard a member indicating that it was fair for paid parental leave paid by the taxpayer to be paid at full income replacement, notwithstanding the Productivity Commission's recommendation directly to the contrary, because annual leave and sick leave get paid at income replacement rates. That wholly misunderstands the nature of the paid parental leave payment that is going to be paid for by the taxpayer. It is flawed analogy because we all know that annual leave and sick leave are not paid for by the taxpayer; they are paid for by the employer.
This partly demonstrates some of the problems with this paid parental leave scheme. The Abbott government wants the taxpayers to pay income replacement for well-off people and employers to stop paying those income replacements. In those situations where there has been enterprise bargaining and where productivity gains have been exchanged for improved conditions for working people and employers are now paying income replacement paid parental leave, the government would like to relieve those employers of that obligation and to effectively subsidise those employers by transferring the obligation to make those payments from the employer to the taxpayer. Frankly, I think that is ridiculous and unfair.
For that matter, all of the allegations made that everybody should have the same paid parental leave entitlements are really interesting, as they come from a government, a party and a tradition that champions individual bargaining, and I am sure they would not be suggesting that pay and condition improvements ought to come without corresponding increases in productivity and productivity gains. But I digress, Deputy Speaker Mitchell. We are talking about child care.
The Abbott government's record on child care and work and family policy is just atrocious. They promised no cuts to education before the election, and what have we seen since the election—cutting funding for schools, cutting funding for universities, higher university fees for students, failure to guarantee future funding for preschool. And now early childhood education has been added to the long list of Abbott government broken promises. It is pure hypocrisy not least because the Prime Minister personally wrote to centres about the impact of capping the childcare rebate on families before the election, saying it would mean increasing out-of-pocket costs for families. Of course that is exactly what this bill is for; that is exactly what this bill does. We have already seen this government's announcements stripping almost a billion dollars from early education and care, $450 million cut from outside of school hours care, $157 million cut from family day care services and a range of other cuts. But we are now seeing this square, direct attack on the childcare rebate and the childcare benefit.
The childcare benefit is means-tested and targeted. It is extraordinary that the government is going to make cuts to a payment for which eligibility starts to reduce when families earn just $41,000. We know from the Senate committee hearings that the government has done very little, if any, real analysis of who will be hurt by these changes and how much they will pay. Instead, this is a government that is trying to rush these childcare benefit changes through the parliament in a sneaky and underhanded way and these changes are going to have a negative impact on at least 500,000 low- and middle-income families. It is just not good enough.
It is a very disappointing set of changes, and that is why Labor believes that particularly for the childcare benefit there ought to be an opportunity to fully consider, consult and debate in respect of those changes. That is why we have moved the amendment to split the bill. We believe that particularly for that relief targeted to lower and middle-income earners there ought to be an opportunity for further discussion and further consideration in respect of that change to the childcare benefit. Frankly, it is a ridiculous indictment of this government's policies that they are refusing to reconsider their ridiculous paid parental leave scheme where the more you earn the more you get, while at the same time making it harder for families to afford child care.
I rise to speak on the Family Assistance Legislation Amendment (Child Care Measures) Bill 2014. This bill seeks to do two things: to freeze the childcare rebate limit at $7½ thousand per child per annum for three years and to freeze income thresholds for the childcare benefit CCB for three years. In the second reading amendment proposed by the shadow minister, Kate Ellis, we have made it very clear that on this side of the House the opposition calls for the two elements of this bill to be separated so that they can be considered separately and there can be real community consultation with families and childcare providers on the effects of these changes separately.
For Labor there is quite a difference between the two. The childcare rebate, firstly, was something that Labor also sought to freeze when we were in opposition. The then opposition of course fought against that and argued that it was poor decision and they went around the country saying that it was a poor decision. But at the time we were talking about freezing the childcare rebate in order to transfer that money into other areas of child care. The then opposition has now completely changed its mind and thinks that it is a very good idea not just to freeze the rebate but to take that money out of child care completely, in other words, reduce the amount of funding available to parents who seek to put their children into child care.
The second element, though, the childcare benefit is something that we on this side of the House have extraordinary concerns about. This benefit is very much about low- and middle-income families. In many ways the combination of the two, the rebate and the benefit, recognises that for lower income families the proportion of the disposable income they spend on child care is greater and this compensates lower income and middle-income families for that difference by providing an extra payment. I heard the minister this morning on radio pretending that the freezing of the benefit would not make a difference because parents would then pick it up in the childcare rebate. If you know anything about mathematics, of course you would realise that that is not true. The childcare benefit is a 100 per cent payment and the rebate is 50 per cent up to $7½ thousand, so the more you reduce the benefit the less a low-income family receives in assistance, and it can be a substantial amount over a 12 month period.
In many ways, this is the government of extraordinary contradictions. We have an amazing one here where we see on one hand the gold plated paid parental leave scheme, which reimburses a parent at their full rate of pay up to $50,000, presumably intending to assist women to move in and out of the workforce. On the other hand, on the same page, they then make it more difficult for families to afford the child care they need on returning to work. So, on one hand they argue that they are trying to help women return to work and on the other hand they take the very thing that assists a family in raising children for the years after the birth of a child—again, an extraordinary contradiction.
But we see it in so many other ways: the slowing down of the increase in the super contribution, which makes it more likely that a person will need the pension—and then they cut the pension. They cut all funding to urban rail projects, making it more necessary to drive, and then they raise the cost of petrol. They cut preventive health agencies, making it more likely that a person will need to see a doctor, and then they raise the cost of going to a doctor. They deregulate universities, presumably to allow more people in to universities, but make it less affordable in doing so. They increase the interest on HECS to six per cent so that the more you earn the less you pay. A person working in a lower-paid job with the same university degree will pay more for their university education than a person in a higher paid job. And of course there is this one, where they are providing extraordinary levels of assistance to high-income earners yet making it more difficult for women in the lower- and middle-income areas to actually return to work at all.
You can see from our record in government the extent to which Labor understands the economic benefits of child care and preschool. We invested considerably in those areas, because we understand, unlike the current government, that prosperity is built not by the assets that we have in the ground but by the assets we have in our minds. We heard the Treasurer mention the word '2050' recently in terms of the costs of pensions, but we never hear the government talk about 2050 in terms of prosperity and where this nation will be at that time. But those of us who do think about that know that in 2050 it will not be the coal in the ground that makes us prosperous; it will be what we have in our minds—our ability to think, our ability to outperform intellectually and outperform in innovation the extraordinary powerhouses to our north.
The assets in 2050 will not be 55-year-olds like me; they will be 35-year-olds. Given the speed of change, the assets in 2050 will be the minds of our 35-year-olds—who are being born this year, and it takes 35 years to make one. It takes 35 years to make a good 35-year-old. And, unlike many other assets, you cannot retrofit them. You cannot redo their first five years of life. When a baby's mind decides that it wants to learn about language, that is what it learns, and you either encourage it to do that or you do not. You cannot do it later at anywhere near the same speed and, if you try, it costs you more. It takes 35 years to build the good 35-year-old worker that we will need in 2050, and it starts this year with the birth of children. We knew that, and that is why when we were in government we invested incredibly in preschool and early childhood education and sought to raise the standards so that child care was not about child minding but was actually about building the lives and the assets of the future.
There has been a considerable amount of research done on this. It is incredibly impressive—not just the impact of child care on three- to five-year-olds or two- to five-year-olds but the impact of child care on zero- to two-year-olds. Goodstart.org.au has provided some incredibly well-researched data. It assessed all year in year 1 against seven development domains, and it found that children who did not attend preschool were 50 per cent more likely to be developmentally vulnerable than children who did and that children from the poorest 20 per cent of households were twice as likely to be developmentally vulnerable as those from the richest 20 per cent. In other words, as a government, you need to invest in the poorest 20 per cent of households to lift them. If you want to be a 'lifter'—to use the language of the government—you invest in the poorest 20 per cent of households, because they are the ones where the difference will be greater, where there is a 50 per cent greater chance of them being developmentally vulnerable than there is for a child who did not attend preschool. Children who were developmentally vulnerable were also three times as likely as other children to perform poorly in reading, numeracy and NAPLAN tests in year 3, year 5 and year 7, again demonstrating that you cannot retrofit those first years of a child's life.
Children who attended three years of early learning or more performed much better on four-year literacy and numeracy tests. These tests, in 2011, were done over 40 developed countries that participated in international tests in literacy and numeracy and science for grade 4 children. Children who had three years of early learning or more scored an average of 30 to 40 points higher in the tests than did children who had no early learning and around 20 points higher than those who attended only one year of early learning. So, again, these early years are incredibly important in setting up those foundations across those incredibly important disciplines of reading, maths and science. Children who were taught by a preschool teacher with a diploma or degree qualifications scored 20 or 30 points higher in year 3. So, again, that quality framework that Labor introduced was done for a reason. It was done to ensure that our children in those incredibly important years of age zero to five had absolutely the best start in life so that when they reach 35 years of age and they are competing against these powerhouses to the north they will be the employees that our businesses want and they will be able to build good lives for themselves.
These are incredible results. A 15-year study of 3,000 English schoolchildren found that access to high-quality preschool had a strong effect on later literacy and numeracy and that the effect of 18 months of preschool was stronger on literacy and numeracy at age 11 than were all the six years of primary school. In other words, you can make a greater difference with that 18 months of preschool than you can in six years of school—again, absolute evidence for why governments should be investing in these early years to an incredible extent and why a bill before this House that makes it more difficult for people from low-income families to keep their children in child care to an extent that benefits the child is incredibly poor decision making. It indicates an extraordinary lack of vision for the future and indicates a government that claims to be thinking about the future but actually is not in any way.
That is why Labor, when it was in government, did a number of really important things, and it is really sad to see this government undoing those things as quickly as it can. Following its election in 2007 it increased the Child Care Rebate from 30 per cent to 50 per cent of out-of-pocket expenses and increased the cap from $4,300 to $7,500 per child, an incredibly important measure that meant that the number of children in child care at any one time grew to over one million, an increase of nearly 30 per cent since 2007.
We also introduced federal funding for preschool, and as a result the number of children benefiting from 15 hours of preschool—that is the number of hours covered in the survey from the UK—increased from 12 per cent of children, in 2008, to over 56 per cent of children in 2008. We know that attending 15 hours of preschool leads to higher scores in year three NAPLAN tests and year four maths, science and languages. In other words, that 15 hours of preschool is essential to building the assets this country needs.
We are benefiting from historical advances in education that we inherited, largely due to our history. With the extraordinary efforts that our neighbours to the north are putting into education on 50-year plans, if we think we can continue the way we are and still be competitive in 2050, we are kidding ourselves.
Let's look at what the government has done. They campaigned on making child care more affordable, yet they have done exactly the reverse. They stripped almost $1 billion from early education and care, $450 million for outside-school-hours care is gone, $157 million for family day-care centres is gone, support to help parents complete study and get back to work has been cut, programs to increase childcare places are completely gone, and Aboriginal Child and Family Centres funding is gone. How extraordinary is that from a government that speaks the language but cuts the programs. Then there is $300 million in support for educator wages, which is completely gone. Now, they are out on the attack on the backbone of the childcare system, which is the Child Care Rebate and the Child Care Benefit. I stress again that the Child Care Benefit is the one that assists low- and middle-income families to keep their children in child care to the extent necessary for that child to benefit from that outcome. They have also cut funding to the Partnership Agreement on Early Childhood, which funded preschool attendance of up to 15 hours per week, which again is something that will have an extraordinary impact on the future of our children.
I heard the minister this morning on radio saying that you can move from the benefit to the rebate. A basic understanding of maths would indicate that that is not the case. I would hope that in future our children who attend preschool for more than 15 hours a week would be able to see that, because it is actually quite basic mathematics. She also said that the government had no choice. That is an extraordinary thing. I did a quick calculation this morning on paid parental leave and the Child Care Rebate, given that the Child Care Benefit, even in its most expensive year of the forward estimates, would save the government $76.9 million this year. But I would say that it will cost Australians far more than that in the future through opportunity cost. But $76.9 million is about 1.5 per cent of what they would spend in a year on the paid parental leave scheme. So instead of paying 100 per cent of wages for women, up to $50,000, they could pay 98.5 per cent of wages and that would actually cover the difference. So they do have choices. They are making choices to put money into one area and not another, and this is a very bad place to start cutting.
I rise very reluctantly to talk about the Family Assistance Legislation Amendment (Child Care Measures) Bill 2014. I am reluctant because we should not be having this debate. Both sides of the House rhetorically agree about the huge importance of investing in early childhood. The member for Parramatta put it very eloquently when she spoke about the fact that the greatest investment this nation can have is in its children, especially in early childhood investment and especially for children from low socioeconomic backgrounds.
We should not be having this debate on a bill that cuts assistance for child care—that represents a $336 million cut to childcare assistance in this country, with over $200 million of that cut hitting some of the poorest people in our community. Freezing the Child Care Benefit will leave over 500,000 families worse off, and these are low-income families, not rich families. I heard Liberal speakers last night, particularly the member for Bowman acknowledging that on their own figures this will represent a hit of around $200 a year for each child. In fact, I would argue that is being wildly optimistic. Early Childhood Australia has done modelling estimating that a family on $60,000 a year, well under the average wage, with one child in the childcare system will be $1,800 a year worse off by 2016-17. From a total family income of $60,000 they will be $1,800 worse off. This is a massive hit. As the member for Parramatta said, this is a massive hit on families that we need to be supporting by investing in child care. Early-childhood investment is so important, and this bill moves us away from that investment.
Unfortunately, this bill is part of a wider attack on child care by this government. This government has already stripped over $1 billion out of child care funding. This includes $450 million for outside-school-hours care, $78 million per annum cut from the Aboriginal Child and Family Centres, and $157 million cut from the community support program. Now we hear that preschool funding, through the National Partnerships Agreement, is well and truly under threat. All of these will have an impact on families trying to invest in child care for their kids. For example, the $157 million cut from the community support program represents a $35 per week hit on families. That is nearly $2,000 per annum. If you add the $2,000 hit from that funding cut to the $1,800 hit from this you have almost $4,000 in cuts to childcare assistance for families. That particular cut really represents an attack on family day care.
Those on the other side champion the fact that they are pro family day care. They are the ones who constantly support that very important part of the sector, but when you match their actions with the rhetoric, we find them well and truly wanting.
A person in my wife's mothers group recently set up a family day care centre. It was a huge challenge for her to go around babyproofing a house and to go through all the training and quality assessment. One of the reasons she was able to take on this huge endeavour was that she got administrative assistance so that she did not have to spend three-quarters of her week doing paperwork. This $157 million cut represents a direct attack on her and everyone like her who is trying to run a family day care centre and provide greater flexibility for families.
All of this represents yet another broken promise from those on the other side. Mr Abbott went to the election promising to make child care more affordable. He promised to do away with these indexation freezes—he attacked them ferociously before the election. What do we see now? We see a billion dollars in cuts, more indexation freezes and more direct attacks on families.
The Hunter Valley, my region, is among the regions that are least able to afford these cuts. It is a region with quite diverse income levels, but it includes some of the poorest suburbs in the nation—and there is a real lack of child care. On average, there is a two-year wait for child care in the Hunter.
I can talk about the childcare situation in the Hunter from a personal perspective. My wife and I are, I acknowledge, in a very privileged position. But when my wife fell pregnant with our child, we did the right thing. Once we hit the 12-week mark and we had the scan that said that everything was generally okay, we put our name down—'unknown Conroy' was what we put down—at myriad childcare centres. We put our own name down with 15 childcare centres in the region. A year later, not one of them delivered a place. I remember, on 20 December, the last working day of the year, ringing 20 other childcare centres in the vain hope someone had a spot in an infants room. Luckily, one of them came through. That was a great relief to me and to my wife, who was very keen to return to work.
We were in a privileged position—my wife returning to work was an optional thing. We were not in a position where she absolutely had to return to work. I know families where, in order to pay the family bills, the mother had to get back to work straight after they reached the six-week mark. Luckily we got a place. We have to drive about 15 kilometres to drop our daughter off before we go to work—and we manage it. But we are in a lucky position. In my region, you have to fight hard to get a childcare spot—and the funding attack in this bill only makes it worse.
Other parts of this attack are really pernicious. For example, the $78 million per annum cut to Indigenous child and family centres will have a direct impact on my region. My seat of Charlton has a large Indigenous population, particularly on the west side of Lake Macquarie.
I have been campaigning to maintain funding for the Nikinpa Aboriginal Child and Family Centre. This is a great Indigenous childcare centre. It is a brand-new centre set up under a national partnership agreement funded by Labor. The only way it survives is through that program's funding and the childcare benefit. Every single family that goes to that centre relies on the childcare benefit. Their budget is so tight that, if one of their kids drops out, they lose money. So they are really under the gun, but they are doing great work. They are opposite a primary school that has a lot of Indigenous students. Once the kids who go to the centre turn three, they get taken across the road to the primary school. They see school assemblies, they go through the library—they get introduced into the culture of schooling before they have to go there. All the research shows that, for Indigenous families, that is crucial to getting kids to go to school and to prosper in school. All this is under attack from a government that talks about child care but does not believe in it. They talk the talk but they never walk the walk.
What is worse is that all of this comes out of a poor process. When the minister gets up in question time, she talks about the importance of the Productivity Commission report. She tells us how they are the government that had the guts to get the Productivity Commission to look into child care and how Labor in government never had the guts to do that. But what is the point of getting the Productivity Commission to look at child care if you have made all your major policy decisions before they even report? Their draft report is not due for another five weeks, but we have already seen $1 billion worth of cuts to the childcare sector in the meantime. That just shows the hypocrisy of those opposite. They talk about cost-benefit analysis and they talk about in-depth economic analysis, but when there is a cut to be made they jump in with both feet.
They are using the budget yet again as an excuse for these heartless cuts. As speaker after speaker on this side has pointed out, the budget is built on sand. They have confected a false budget emergency as a basis for pursuing all these heartless cuts. The federal budget is in good shape. We have one of the lowest debt levels in the western world. Debt is projected to peak at less than 20 per cent of GDP—less than a third of the OECD average. Those on the other side have confected this scare campaign in an attempt to fundamentally reshape the nature of Australia—to make it a more dog-eat-dog society—and to attack those on low and middle incomes, those who are the most vulnerable.
This childcare legislation and the cuts it embodies must be viewed in the broader context of the attack on families which this budget represents. The significant cuts in the budget to family tax benefit part A will mean that, for a family on $60,000 a year with two kids between eight and 15, there will be a cut in payments of $6,000. These are not Labor figures; these are figures from NATSEM—a modelling organisation of high repute. So highly esteemed are they that the Prime Minister used them before the last election and stated on the public record that they are the premier modellers of family income in this country. They have stated in their analysis of the budget that a family on $60,000 a year with two kids between eight and 15 will lose over $6,000. That represents more than 10 per cent of their family income. Just imagine it: you are a family with a combined income less than the average wage and this government is cutting your family income by $6,000, or 10 per cent. That is a huge blow to families. Then you combine that with the attacks on child care—the kids in that family may have out-of-school child care—which this government has cut by $450 million.
This really is a government that does not care about families. They claim that they are family friendly, but when you look at their actions rather than their rhetoric, they are found wanting. This attack on families is even more hollow when you look at their ridiculous paid parental leave scheme, a scheme worth over $5 billion a year—which, as the member for Parramatta pointed out, well exceeds the cuts they are subjecting the childcare sector to.
This is a paid parental leave scheme that is grossly inequitable. Figures derived from the Parliamentary Library show that 80 per cent of women of child-bearing age, in my seat of Charlton, earn less than $42,000. That includes welfare transfers from the government. So 80 per cent of women in Charlton will receive less than $20,000 under Mr Abbott's ridiculous paid parental leave scheme. Why is it fair for a family in Charlton to receive less than $20,000 to have a baby while someone in North Sydney or Warringah receives $50,000? Why are the babies of Charlton worth $30,000 less than the babies of North Sydney? They are not, but it shows the gross inequity of this government and the skewed priorities.
It also shows that they are happy to rely on the Productivity Commission for some things but not for others. The Productivity Commission made it very clear that a minimum-wage system rather than a replacement-wage system was the most effective way of undertaking paid parental leave. It is the best way of providing incentives for workforce participation by women, particularly women in low- and middle-income jobs. They are the ones we really need to give an incentive to, to return to work.
We hear ridiculous rhetoric from the other side that it is a workplace entitlement. I challenge them to find another workplace entitlement paid by the government. It is not a workplace entitlement, it is a welfare measure, and every Australian woman should be entitled to the same amount of welfare for having a baby. This paid parental leave scheme does not deliver that; in fact, it goes in the opposite direction, where the richer you are the more you get.
We need to contrast this with the government's attacks on the childcare sector. The Grattan Institute, another good economic organisation—they do not always agree with what Labor does but they are serious, economic policy advisers—have found that investment in child care is twice as effective as investment in the paid parental leave scheme. As the member for Parramatta said before, it is not just the first six months of a child's life that you need to invest in. You need to invest in their entire life and you need to encourage workforce participation beyond the first six months. Investing in child care is worth twice as much, is twice as effective, as investment in the paid parental leave scheme.
That really is the nub of this debate: $5½ billion a year on a paid parental leave scheme that rewards millionaires over low- and middle-income Australians is patently unfair. It is also unfair if you look at the opportunity cost. The opportunity cost means that with the $5½ billion you could be well and truly avoiding the cuts to child care. In fact, you could be doubling what is currently invested in the childcare sector, making our childcare centres palaces, making them great places for kids to get the best start in life. Instead, we see the other side pursuing a narrow ideological agenda, where they want to attack any assistance for low- and middle-income families—just as they want to attack pensioners and unemployed people.
This is a government that claims to have a small-government mentality and be ending the age of entitlement. They are ending the age of entitlement for low- and middle-income Australians, they are ending the age of entitlement for pensioners, but they are not ending the age of entitlement for millionaires. That is the great tragedy of the Australia we find at the moment.
This is a debate we should not be having in this place. We all agree that investment in child care is great. We all agree that we want to give our kids the best start in life. I say to the Liberal-National coalition: match your words with action. Invest in child care, invest in giving our kids the best start in life, because this bill is not that. This bill is an attack on families. It is an attack on low- and middle-income kids. It is an attack on giving our kids, Australian kids, the best start in life. That is why Labor's amendments should be agreed to.
I also support the member for Adelaide's amendment. I appreciate the opportunity to speak about the bill and follow the wise words of my colleague the member for Charlton and my other colleagues the member for Griffith and the member for Parramatta. I also thought the member for Lalor made a characteristically thoughtful contribution last night.
I begin my own contribution by paying tribute to childcare workers. In my own electorate, like so many of the electorates in this place, we are very fortunate to have some tremendous childcare centres full of people whose contribution and commitment to raising the next generation of Australians is faultless. On Chatswood Road, you can go past one of the centres in the morning—even before the sun comes up, if you are on a walk or a run—and see the childcare workers out there sweeping the astroturf. They are making sure they are there early enough so that when the tradie utes pull up with the young boys and girls to be dropped off to the childcare centre there is someone waiting for them and someone to care for them.
I am very blessed. I have two wonderful sisters, and one of them is a childcare worker. She used to run one of the child care centres in my own electorate, at Algester. I know from speaking to her, over the years, the extraordinary commitment of these childcare workers. Even though they are not paid a great deal of money, I know that they often dip their hands into their own pockets to pay for the crayons or the butchers paper. I know they often do special things for the kids' birthdays out of their own pockets. I pay tribute to the types of people that my sister Chelley works with, because I do know they are fantastic people. You cannot say enough about their commitment and contribution to helping raise that next generation of Australians.
In my own electorate, there are something like 11,100 families who rely on child care. There are 147 approved services and something like 9,760 families who rely on the childcare rebate, which is one of the things we are talking about today. These are good people who want to be good parents and good workers, all at the same time. They are people who are just trying to make ends meet and, quite often, that means having access to good-quality and affordable child care.
This government had two very different themes before and after the election, when it comes to these sorts of issues. Before the election, they talked about being a government of no surprises. They talked about no cuts to education. They talked about being consultative. They sent all kinds of reassuring letters to childcare centres, pretending they had no plans to cut people's assistance when it came to the childcare system. After the election, of course, a very different theme emerged.
We should not mince words about the team that emerged after the election. It really is an unfair agenda. It is a deliberate attack. It is an ambush on people who want to access that good-quality child care at affordable prices. They are people who are just trying to make ends meet. In lots of ways it was less of a budget and more of an ambush that we saw, in this place, delivered by the Treasurer in May.
The more kind interpretation of all of this would be to blame it in some way on ignorance or something like that, but the reality is that the government are not ignorant of the impact of these changes. They did not even care to ask what the impact would be, particularly on low- and middle-income families. It is unforgivable, to my mind, to think that they did not even ask any of their experts, 'What would this mean for people who are doing it tough in our community, who are trying to be good parents and good workers?' You would think that would be the very least that they could do. The fact that they did not ask for that kind of advice really does speak to their lack of care about this issue.
There are people behind every policy change that is made. Every number that is on the page of a budget document represents an impact on a human being and an impact on their community. It is crucial to understand just who this policy change proposed by the government hurts. It is not accidental; it is deliberate, it is intentional and it is by design. It is another example of the burden of this so-called budget emergency—which is a con—being unfairly borne by the people who can least afford it.
We get a bit of a hint of their thinking on some of these matters when we consider that the Prime Minister really does think that there are two kinds of women in the workforce. We know this because of his comment not that long ago which tried to differentiate women of calibre and, by implication, women who are not of calibre. This was a really Romney-like moment. You will remember Mitt Romney talking about binders full of women when he was trying to defend himself against some of the allegations made in his own presidential campaign. Mitt Romney and Tony Abbott really are Downton Abbey brothers in arms when it comes to these sorts of issues. We know that the Prime Minister has a view that there are some deserving women and some undeserving women. We know this especially in the case of the Paid Parental Leave Scheme.
I thought that those who spoke on this legislation before me did an extraordinary job of pointing to the unfairness in the government's Paid Parental Leave Scheme. The member for Griffith explained it well in referring to it as a really regressive measure. It is not fair, when you have limited funds coming into the government, when you have budget constraints, to think that their highest priority would be $21 billion so that they can give $50,000 a year to the wealthiest parents in our community just to have a baby. It is extraordinary that they would prioritise that over some of the assistance that we are talking about today. It just shows how warped those priorities are. It is not just Labor saying that and it is not just the union saying that—as important and as crucial as the union is in looking after childcare workers. There are a whole range of stakeholders who are saying that.
I want to mention again, as other speakers have, that the Australian Industry Group argued that the cuts would not be necessary if some of the expenditure allocated to the government's Paid Parental Leave Scheme was redirected. You would think that would be a no-brainer. When you look at the unfairness of the PPL and the extravagance of that scheme compared with the unfairness of some of the things being proposed here, you would think that would be a no-brainer. It was not just the AiG who opposed this bill. Early Childhood Australia, Family Day Care Australia, Early Learning Association Australia, Australian Childcare Alliance, Goodstart Early Learning and the National Welfare Rights Network have all lined up. There is a long queue of people who think that this legislation has been rushed and that it needs more consideration and that it is not right to attack people on low and middle incomes who are just trying to access affordable child care. These groups cannot understand—just like big swathes of the community cannot understand—why there is a need to rush. Why the rush, from a government that said 'no surprises'? I can shed some light on that.
As other speakers have reminded us—the member for Charlton mentioned this in his contribution—the Productivity Commission will report on some of these issues firstly in July and then I think in October. You would think the government would wait for the outcomes of that review before they made these changes. There are two reasons why they have not. The first reason is very sneaky. They have given a commitment that the Productivity Commission will come up with proposals that relate to the same sized funding envelope as we began with. They have rushed in $1 billion worth of cuts so that the envelope is substantially smaller for the Productivity Commission to report on. That would not be well known out in the community, but that is a sneaky thing that they are doing. I think the second sneaky reason is appreciated in the community, judging by all the doors I knocked on on the weekend in Meadowbrook in my electorate, plus the forum we held in Browns Plains. When people talk about this budget they say, 'What is the government thinking?'
Some of them say—and I certainly believe this as well—that what the government are trying to do is place a big bet that all this nasty stuff they are doing to Australians now will be forgotten in two years time. That is all it is. That is why they are rushing out these regressive changes before they even get the outcomes of their own review.
I would have thought the Minister for the Environment, who is at the table, would be up for some empirical policy advice—obviously not, judging by the interventions being made as he makes his way through his big stack of folders.
The rush to make these cuts is really a political strategy. It does sell Australian mums and dads short. It does attack their living standards. The government try and justify it by a budget emergency that does not exist, if you listen to credible people, like the International Monetary Fund. If the government had an economic strategy, we would not be debating these cuts. Unfortunately, these cuts are not the only cuts that they propose to the childcare system. Others have spoken about a series of cuts that add up to around $1 billion, whether it is the $450 million for outside school hours care, the $157 million for family day care services, the funding that has gone from Indigenous child and family centres or the $300 million in support for educator wages—the people I began my contribution by talking about, the great people who look after our kids in the community. Now, of course, we have this attack on the absolute backbone of the childcare system: the CCR and of the CCB. We know from the education department that the combination of measures that we are debating now will hurt half a million low- and middle-income families, who will receive less support as a result of this measure.
The member for Griffith paid tribute to former Prime Minister Rudd, and I pay tribute to him as well and to former Prime Minister Gillard and all the ministers who were in this portfolio, including the member for Adelaide and others, who did such a tremendous job in this policy area.
The member for Adelaide would like to know more about this, so I will tell her more. One of the first actions of the new Labor government in 2007, as she would know, was to increase the childcare rebate from 30 per cent to 50 per cent and to increase the CCR cap. We also gave families the option of claiming the CCR payment fortnightly, which made a big difference—and there are all kinds of stats that others have spoken about. Modelling showed that out-of-pocket costs for a family earning 75 grand a year reduced from 13 per cent of their disposable income in 2004 to 8.4 per cent in 2012. There are reams and reams of stats like this to show what an extraordinary success Labor's childcare policies were in government. We are very proud of these achievements not just because of the impact that they had on the childcare system and that they had on people's disposable income and their capacity to make ends meet but also because they were a contribution to the type of economy that we want in this country. We want an economy where more people participate, where more people benefit, where the gains of economic growth are more broadly and fairly shared. We make it easier for people to be simultaneously good workers and good parents.
The member for Adelaide has mentioned a compelling stat, and it is worth mentioning again. Research shows that the relationship between childcare affordability and women's workforce participation is strong. A one per cent increase in the gross childcare price results in a decrease to mothers' employment rate of 0.7 per cent. That is a substantial, concrete piece of evidence about the impact that these sorts of measures that are being proposed can have on participation in our economy. Lower income families have been proven to be the first to drop out of work as childcare costs increase. I have a lot of lower income families in my electorate. I am proud to represent them. One of the reasons I wanted to speak on this is that the changes that are being proposed would have a disproportionate impact on those people that I am so proud to represent. As the member for Charlton said, you cannot just talk the talk of workforce participation; you need to walk the walk if you are fair dinkum about workforce participation. It is on measures like this that the rubber really hits the road.
We have workforce challenges associated with the ageing of the population and all kinds of things. Participation is one of those workforce challenges. The participation rate has been bouncing around—in the last ABS data, I think it dropped down a little bit. In the long term, we have big challenges associated with finding the right amount of workers to support a growing proportion of retirees in our economy. That is why this debate is so crucial. If we make dads and especially mums choose between being good workers or good parents, we are selling them short. We are selling short their contribution to a stronger economy.
Labor is proud of its record in government. This bill should be split, as the member for Adelaide's amendment proposes, because we should consider the changes to the child care benefit separately. We will oppose the bill if it is not split. This bill is a backward step. Like so many other things in the budget, it is contrary to the guarantees the government gave families before the election. To all of those childcare workers and parents relying on the childcare system in my part of the world in Logan City and some of the surrounding Brisbane suburbs, I want you to know that this side of the House is standing up for people on low- and middle-incomes in the childcare system. We are standing up for childcare workers, like my sister Shelley. We will continue to do that and that is why I support the member for Adelaide, who moved this amendment, and all the good people on this side of the House who have spoken in favour of it
I am pleased to speak in support of the amendment moved by the member for Adelaide. In doing so, I speak on behalf of 6,850 families in the electorate of Kingsford Smith who receive the childcare benefit and the childcare rebate—that much-needed support for affordable child care in our community. I ask representatives of the government: why are you cutting funding for childcare support for families by freezing these two very important payments? Why are you making it harder for families to make ends meet by making childcare more unaffordable? Why are you doing this, when at the same time you are giving large multinational mining companies in this country a tax break? It says everything about the priorities of this government. Why are you not supporting families in a time when cost-of-living pressures are through the roof?
Prime Minister Abbott is not the person he said he would be. This government is not the government that it said it would be prior to the election. Before the election, they made it clear that there would be no cuts to education, no cuts to health, no cuts to pensions and no cuts to the ABC and SBS—but in these bills we clearly see a cut to education and a cut to support for early childhood education in our community. It is a clear and continuing broken election commitment. Before the election, the Prime Minister personally wrote to all childcare centres about the impact of a proposal to cap the childcare rebate. Before the election the Prime Minister's view, put in writing to those childcare centres, was that capping and freezing the childcare rebate 'would increase out-of-pocket costs for families.' Yet, this is exactly what his government is doing. The hypocrisy of this government knows no bounds when it comes to the cuts that they have undertaken to education and health and their changes to pensions.
In my community, the cost of living is the No. 1 political issue. It is the No. 1 pressure facing families. Housing costs are astronomical—they have gone through the roof. What is the approach of this government? They apply layer upon layer of additional pressure: implementing GP co-payments so that families will now have to pay every time one of their kids get sick and has to visit the doctor; removing family tax benefits and making it more difficult, particularly for single-parent families, to make ends meet; cutting the schoolkids bonus, vital support to families to ensure that they can meet the costs of sending kids to school; and now, in these bills, they are freezing the childcare rebate and freezing the childcare benefit. There is layer upon layer of more costs and more difficulty for families through these reforms.
For many families in my community the Child Care Rebate or the Child Care Benefit is the difference between having a child in chid care and not having the child in child care. Subsequently, it is the difference between the ability of some families to have both parents in the workforce and only one parent in the workforce—and that is very important to cost-of-living pressures and the ability of families to participate actively in society. Freezing these childcare rebates and benefits will make it more difficult for families. That is illustrated by the numbers of people who will reach or have reached the cap for the rebate.
The greatest betrayal in this reform is the fact that the savings generated from the freezing of these benefits will not be re-invested in early-childhood development or in the childcare system. They are clear cuts to early-childhood education and clear cuts to benefits and payments to families to help them meet the costs of having kids in child care. That says everything about this government's priorities, particularly in the context of offering tax breaks to wealthy mining companies and to those who are on large superannuation balances and who earn large incomes from them. It comes on top of cuts to early-childhood education in other areas—$450 million has been cut from the out-of-school-hours care program. In my area a school like Randwick Primary School, which has 800 students, has a waiting list of 100 students—100 families are trying to get their kids into out-of-school care. How happy are they going to be about the cuts that this government is making to out-of-school care? They are going to be extremely pleased that $450 million is being cut when that money could be used to expand the number of positions at places like Randwick Primary School. Such care is necessary in the context of having both parents work, as modern families do.
Some $157 million is also being cut from Family Day Care services. Indigenous Family Day Care centres are facing cuts. One is the Gujuga Family Day Care Service in La Perouse, which I recently visited and which provides a wonderful service to young students. It is teetering on the edge, because the support they have been receiving from all levels of government is threatened by the federal cuts; and, no doubt, that will have an impact on the number of places they can provide for Indigenous families.
This government's approach to childcare workers is nothing short of disgraceful. Anyone who has kids in child care, as I do, would know just how hard and important the work of childcare workers is for early-childhood development. They are not simply a child-minding service. Early-childhood workers are educators, and numerous studies demonstrate the value of early-childhood development for the ongoing educational capacity of kids and for the developmental abilities of kids, particularly those with disabilities—the value of early intervention and early education for kids with disabilities is infinite. I see it in my children. My eldest daughter could read words before kindergarten, because of the support and the education she was given by the educators in her childcare service. It is a valuable service that, historically, has been undervalued by the community. Relatively speaking, childcare workers are being paid a pittance when compared to the value of the service they provide for kids and their development and, ultimately, the productivity of our education system and the economy.
The previous government's approach was to say that finally as a society we need to value the work and the role of early-childhood educators. We need to highly value the role they play not only in looking after kids and educating them, but also in the emotional support they provide. That was evident in the approach taken by the previous Labor government, guided quite ably by the member for Adelaide, in boosting the wages of childcare workers to ensure they are paid a fair and decent wage.
The greatest betrayal, as I have said, is that the money saved through these cuts is not being re-invested into early-childhood development. That says everything about the approach of this government and this government's priorities, especially when it provides a tax break for large multinational mining companies and for those with large superannuation balances and when it persists with the $16 billion Paid Parental Leave scheme.
The impact of freezing the Child Care Benefits will be monumental for some families. The Child Care Benefit is a targeted payment—it is means tested and starts to reduce once a family's income reaches $41,000 and cuts out at $145,000 for single-child families. So it is targeted to low-income families to ensure that they have the support and the wherewithal to send kids to child care. In the Senate inquiry into this particular bill, the Department of Education admitted that 500,000 families will receive less support for early-childhood education from the changes and the freezing of the Child Care Benefit. This proposal is being rushed through the House and the parliament with very little community consultation. I note that a number of advocacy bodies and people who work day to day in this space are opposed to these changes. Many of those bodies were given only five days to comment on the context and the implications of this bill. Perhaps one of the greatest ironies of this reform is the fact that the Productivity Commission inquiry into early childhood education and learning is still running. One would think that the government would await the outcomes and the recommendations of their own inquiry before jumping to conclusions and rushing through legislation, without adequate consultation of the wider community and interested parties—but, no, they have adopted this reform. Again, this is another example of a government without a plan and with policy being developed on the run—policy that is being rushed and that is ill-thought through, particularly on the implications for families.
In terms of the childcare rebate, the impact will again affect a number of families in my community. The childcare rebate is a non means-tested payment that provides 50 per cent of the out-of-pocket expenses up to $7,500 per child per year. In terms of the cost of freezing the cap, it has been revealed that 74,000 families will reach the cap in 2014-15 and that that will increase to 150,000 families in 2016-17. It says everything about the impact moving forward of freezing this benefit on those families for whom childcare will become unaffordable and more difficult as a result of this reform. In opposition, as I mentioned earlier, the current government, the Abbott government, opposed freezing the cap. Even when we were planning to invest that money back into the childcare system, they opposed this reform. But here we have them pushing ahead with this reform. It is a rushed reform. There has been inadequate consultation, and this is symbolic of the government developing policy on the run.
In conclusion, on behalf of those almost 7,000 families in my community who are feeling the pinch when it comes to the cost of living, who are struggling to make ends meet and to ensure that they keep their kids in child care, the childcare rebate and the childcare benefit can mean the difference between having their kid in child care and not having their kid in child care. The freezing of these payments and the rushed manner in which these reforms have been conducted, particularly in the context of the government's ongoing Productivity Commission inquiry, is something that the opposition does not support. This is why the minister has sought to split these bills. There has not been adequate consultation in order to get an appropriate response from those in the community who are affected by these reforms and nor have the implications of these reforms been thoroughly thought through.
In summing up, I thank all the speakers on the Family Assistance Legislation Amendment (Child Care Measures) Bill 2014 for their contributions to the debate. I want to reiterate that this government is committed to making child care more affordable, flexible and accessible for Australian working families. I want to start by making something very clear to address so much of the misinformation from Labor members during this debate. Overall, this government is increasing, not cutting, childcare assistance to $28½ billion over the next four years to assist around a million families each year through the childcare benefit and the childcare rebate.
The proposed amendments to the Family Assistance Legislation Amendment (Child Care Measures) Bill will do two things: maintain the childcare benefit income thresholds for three years and continue to pause the childcare rebate limit at $7,500 per child per year for a further three years. Both of these measures will apply from 1 July 2014 for three years to 30 June 2017. It is fiscally responsible for this government to maintain, not cut—as the member for Adelaide would have you believe—the current CCB income thresholds, along with the current CCR annual limit, pending the outcome of the Productivity Commission's inquiry into child care and early learning in October 2014. The terms of reference for this broad ranging inquiry include consideration of rebates and subsidies for child care. The draft report will give us the first insight into their proposed reforms and is due next month.
The measures contained in this bill are, however, moderate and necessary. The Senate Education and Employment Legislation Committee noted:
… the committee is persuaded that these measures are limited, well targeted and for a finite period of time, and are a necessary part of the broader government agenda of repairing the budget and strengthening the economy.
The government is making decisions that will prepare Australia for the long-term challenges and opportunities that confront us. The childcare benefit measure in this bill is a 2014-15 budget measure and is one element of the government's broader measure to maintain eligibility thresholds for Australian government payments for three years. Maintaining the childcare benefit income thresholds will provide an estimated saving of $230 million over the forward estimates. Childcare benefit eligibility requirements will remain unchanged. This is not a cut. The government will continue to index—that is, increase the childcare benefit standard hourly rate, increase the minimum hourly amount and the multiple child loadings by the consumer price index on 1 July each year. It is important to note that the out-of-pocket costs incurred by most families because of the childcare benefit measure will be reduced by the childcare rebate, which is not income tested and which covers up to 50 per cent of out-of-pocket childcare costs, up to $7,500 per child per year.
The childcare rebate indexation pause at $7,500 was first implemented by Labor in 2011. Labor announced an extension of the measure as part of their 2013-14 budget and then took the $105 million in savings from the budget bottom line but never legislated for it. When this government sought to legislate the measure, Labor combined with the Greens in the Senate earlier this year to block the legislation that would have given effect to their own measure. So I welcome their apparent change of mind. It is very good to see that the opposition is no longer opposed to their own measure. The CCB measure will not impact families with incomes below $41,902, which is the lower income threshold for childcare benefit. These families will continue to receive the maximum rate of childcare benefit. Families with incomes above $41,902 will continue to receive CCB. The amount of CCB a family receives tapers to zero as their income increases to the relevant maximum income limit. The CCB measure in this bill ensures the payment is fair and sustainable in the longer term for families who need it most. And I want repeat this, because families need to be aware—despite the broad-brush accusations of the opposition—that the hourly and weekly rates of Child Care Benefit will continue to be indexed—that is, to increase. This means that, per hour, the amount of Child Care Benefit that families receive will in fact continue to increase.
A number of members opposite referred to the Productivity Commission's inquiry called by this government. We actually called for it in opposition, but it was never supported by Labor. They have talked it up today—and I am delighted that they have—but they never, ever supported its inception. As I have said, the measures in this bill do not in any way pre-empt the Productivity Commission inquiry into child care and early childhood learning, which is a holistic review into what is needed for the next generation, not just for the next few years. We are maintaining the current CCB income thresholds, along with the current CCR annual limit, pending the outcome of the Productivity Commission's inquiry, which will report finally in October of this year. As part of its broad-ranging review, the PC is looking into the rebates and subsidies available for each type of care. The inquiry's fourth term of reference specifically asks the commission to look into:
Options for enhancing the choices available to Australian families as to how they receive child care support, so that this can occur in the manner most suitable to their individual family circumstances. Mechanisms to be considered include subsidies, rebates and tax deductions, to improve the accessibility, flexibility and affordability of child care for families facing diverse individual circumstances.
Thousands of submissions and comments have been received, and a number of them have highlighted just how complex these payments are for families and service providers alike. So I really do look forward to the Productivity Commission's draft report next month. But the CCB and CCR measures in this bill are moderate and necessary measures for this time.
Of course, I would have preferred that we, coming into government, did not have to make these changes. Of course, I would have preferred that we did not inherit a budget disaster from Labor which needed urgent action to repair it. Of course, I would have preferred not to be standing here today to sum up a bill that brings in sensible, moderate measures to repair the budget. These are choices that the Liberal and National parties, in government, have been forced to make—by the budget mess left to us by Labor.
We know that Australian families need flexibility. We know that our Productivity Commission inquiry is going to deliver some real, valuable and terrific policy ideas for the next generation. I am delighted that the Productivity Commission will look at the options for the future, within the current funding envelope. I remind the House that the Productivity Commission inquiry is a broad-ranging one, and that one of its terms of reference is to look at the current and future needs for child care in Australia, including the consideration of a number of factors such as the 'types of child care available including but not limited to: long day care, family day care, in-home care including nannies and au pairs, mobile care, occasional care, and outside school hours care'. I make that point because a number of members opposite have highlighted in their speeches the difficulties that they themselves have experienced in finding child care. They have highlighted the difficulties that their constituents face, and they have highlighted the frustrations of not finding the right child care, in the right place, at the right time, and for the right cost. We definitely want to reiterate our commitment to solving this problem. We came into government and inherited a childcare system that, if not completely broken, was certainly heading in that direction. The urgent action that we are taking in terms of repairing the budget is something that will set our economy on a good footing for the next generation. Our inquiry will look at innovative ideas for policies in child care.
I do want to mention something else that a number of those opposite talked about, which is cuts to the Jobs, Education and Training Child Care Fee Assistance—wrong. The program is currently uncapped as to how much parents can claim. Labor's inaction has seen the JETCCFA budget blow out by over $50 million in the past two years. The Australian government is introducing two key changes commencing on 5 January next year: a maximum eight-dollar hourly cap for Jobs, Education and Training Child Care Fee Assistance, and a 36-hour weekly limit per child to payments to recipients who are undertaking study. The average childcare hours used by all families working or studying is around 24 hours a week, and the average hourly fee for all families is $7.65 per child—so most families will find no change to their current situation. For example, with the average childcare hours used by all families working or studying being around 24 hours a week, the 36-hour weekly limit will mean no change to most families' current situations. We are introducing these changes to better manage expenditure and to ensure that recipients are accessing the program in the most cost-effective way. We want to ensure that JET fee assistance is available for as many income support families as possible, to enable them to get the skills they need so that they can secure jobs now and into the future.
The member for Adelaide spoke of what she termed as 'cuts to family day care'—and I do need to mention this because she was, in fact, the minister during 2012, when an audit of the Community Support Program by the Australian National Audit Office found approximately 71 per cent of CSP funding was being allocated to family day care—which accounted for approximately 10 per cent of all children in care. The ANAO recommended that the program's eligibility criteria be reviewed but, typically, Labor did nothing. So the member for Adelaide knows that the program was unsustainable; she knew it in government, but did nothing to repair the situation when she had the chance. She squibbed her responsibilities and now sits on the other side and criticises this government for what we are doing to fix Labor's mess.
Labor has no credibility on child care. The promises that they made never came to fruition. In fact, childcare fees skyrocketed by 53 per cent under Labor—that is, around $73 extra a week in fees for a family using the average hours of child care. In case members opposite say, 'oh yes, but that is before you factor in the subsidies to parents for the Child Care Rebate', let me make the point that out-of-pocket costs went up 40 per cent during that time. That in itself is a disastrous legacy to leave Australian families. The hypocrisy is breathtaking. I know that is a phrase we hear a lot in this House, but in fact, in this case, their hypocrisy is breathtaking. We will soon see that the Labor Party will oppose this bill—this bill that is designed to repair a budget disaster that they left us with. But in this bill is a measure that they in fact announced in their budget but from which they took $106 million in savings, and they assumed that cut would happen. They will sit here and oppose their own measure, which in itself is extraordinary, because Labor members speaking on this bill have been hysterically wrong in so many instances. They say 'You are making cuts', 'You do not care', 'You are not interested', 'Children do not matter', and so on—there has not really been a rationale presented by members opposite for why we would do these things.
In the battle of ideas, there are often competing ideas. You might have different ideas about a range of philosophies and policies, but no Labor member has actually accused us of having a different idea. All they have accused us of is making cuts, and the reason is that they know the only rationale, the only reason, why we are doing these things is that we have no choice in the context of the budget that we have inherited. Labor just make up stories and scaremonger. Those listening to this debate may think that the amount of childcare benefit they receive for their children, the hourly amount, is going down, when in fact it is going up, because all we are doing is freezing thresholds. They might think that the amount of childcare rebate they can claim is going down, when in fact we are pausing the threshold. We are pausing these thresholds for three years to take the moderate, sensible action that we need to to restore the national accounts of this country.
As I said, we have a plan, we have an agenda, we have ideas and we understand the landscape in which we exist and in which we work. We understand what parents need. We know that our Productivity Commission inquiry is going to look after those needs for the next generation. The accusation by a Labor Party that did not even support that inquiry of not waiting until that inquiry report is in, unfortunately a few months from now, fails to understand that this action is being taken in order to repair the budget and that means that we have a limited choice.
I want to commend this bill to the House, I want to reiterate that the childcare rebate measures in this bill are in fact Labor's own measures. They are Labor's own measures. They need to own up, they need to stand up and they need to say 'we will support this part of the bill.' If they oppose this whole bill, then they cannot be taken seriously as a responsible opposition. If they oppose this whole bill, they are effectively opposing something they introduced themselves, and from which they took $106 million in savings to try, desperately, to provide that economic fig leaf of credibility that they had lurched to the last election with. How dishonest; how meaningless. It is absolutely appalling that Labor would not recognise that they in fact own half of the legislation that is being presented today. I commend the bill to the House.
The original question was that this bill now be read a second time. To this the honourable member for Adelaide has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. The immediate question is that the amendment be agreed to.
The question now is that this bill be now read a second time.