Sussan Ley (Farrer, Liberal Party, Assistant Minister for Education) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

Today I am introducing the Family Assistance Legislation Amendment (Child Care Measures) Bill (No. 2) 2014which will maintain the Child Care Benefit income thresholds for three years. This measure will apply from 1 July 2014 for three years, to 30 June 2017.

This measure was previously contained in the Family Assistance Legislation Amendment (Child Care Measures) Bill 2014 (the former bill) which also included a measure to extend the cap on Child Care Rebate at $7,500 per year, per child for a further three years.

The Senate Education and Employment Legislation Committee looked into that bill and noted that '… 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,' (p5). The measures in that first bill were moderate and necessary. This government is making decisions that will prepare Australia for the long-term challenges and opportunities that confront us.

Yet, the Labor Party has made it clear that they will not support both measures of the previous bill. The government, therefore, accepted the opposition amendment to remove the child care benefit component of the former bill in order to secure passage of the child care rebate component, a 2013-2014 savings measure of the former Labor government. However, we made it clear that we would not back down from the child care benefit measure. We do not waver on our commitment with regard to the child care benefit measure because it is an important 2014-15 budget measure that aims to help fix the budget mess left by Labor. Labor will not take responsibility for its budget mess, so this government has to; the government is, therefore, it now reintroducing the child care benefit measure contained in the former bill in this bill.

It is fiscally responsible for this government to maintain—not cut, as the opposition would have you believe, but maintain—the current child care benefit income thresholds pending the outcome of the Productivity Commission's inquiry into child care and early learning, due to report in October 2014.

Child care benefit is a means tested payment based on a family's income. The child care benefit provides assistance to families with childcare costs. The amount of child care benefit a family receives depends on the family's income, the type of care used, the hours of care and the number of children in care, as well as the parents' work, training or study commitments.

The child care 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 child care benefit income thresholds will provide an estimated saving of $230 million over the forward estimates. Child care benefit eligibility requirements will remain unchanged. I want to really emphasise this, because families need to be aware that despite the broad-brush accusations of the opposition, the government will continue to index—that is, increase—the child care benefit standard hourly rate, the minimum hourly amount and the multiple-child loadings by the consumer price index on 1 July each year.

During debate on the previous bill, speaker after speaker from the opposition wrongly characterised these changes as 'cuts'. As I have just explained, they are not cuts; it is disingenuous, it is misleading and it is scaremongering to the parents of Australia to describe something that pauses a threshold as a 'cut' when it simply is not. If a family's income and circumstances do not change from one financial year to the next there should be no negative impact on their assistance. In fact, since the government is increasing the child care benefit hourly rate, many families will see an increase in their child care benefit payment. As with all means tested payments, a change to your circumstances—for example, a pay rise—can change what you are able to receive. This is not new.

It is important to note that the out-of-pocket costs incurred by families because of this child care benefit measure will, in most cases, be partially offset by the child care rebate, which is not income tested and which covers up to 50 per cent of out-of-pocket child care costs up to $7,500 per child per year.

This measure will not impact on families with incomes below $41,902, which is the lower income threshold for child care benefit. These families will continue to receive the maximum rate of child care benefit. Families above this amount will continue to receive child care benefit, which tapers off to zero as income increases. The amount of child care benefit a family receives tapers to zero as their income increases to the relevant maximum income limit. For example, a family with three children in child care for 50 hours a week with an income of up to $170,404 is currently eligible to receive some child care benefit, as well as up to $7,500 child care rebate per child per year.

The upper income threshold of $97,632 referred to in the legislation is a mechanism for the very complex way in which child care benefit is calculated and tapered depending on a family's income, the number of children in care, the type of care and hours used. This is a level of complexity that has been raised by families and service providers alike in the course of the government's Productivity Commission inquiry. Overall, this government is increasing childcare assistance to $28½ billion over the next four years to assist around a million families each year through the childcare benefit and childcare rebate.

This childcare benefit measure does not in any way pre-empt the Productivity Commission inquiry into child care and early childhood learning, a holistic review which is designed to establish the childcare system that works for the next generation not just the next few years. The terms of reference for this broad-ranging inquiry include consideration of rebates and subsidies for child care. The Productivity Commission's draft report will give us the first insight into their proposed reforms, and is due next month. It becomes increasingly evident every day that this Productivity Commission inquiry is vital to the future of the childcare system and the families who use it.

I note that on 22 June the National Centre for Social and Economic Modelling, NATSEM, released their Income and Wealth Report, Issue 35, Childcare affordability in Australia. This report highlighted Labor's failure to address the issue of child care during their six years in government. The NATSEM report states:

Government subsidies help to keep a lid on families’ out-of-pocket child care costs, but it is hard to escape the conclusion they have also helped drive up prices and the cost to government. The higher prices go, the more financial assistance families will require and so the cycle continues.

Labor failed to do the work needed to fix child care and even refused to undertake a Productivity Commission inquiry when they were in government despite calls from us in opposition. Instead, they kept topping up child care on the nation's credit card and, in line with the NATSEM report, helped drive up prices and the cost to government. When you consider that childcare fees skyrocketed 53 per cent under Labor and out-of-pocket costs increased by up to 40 per cent for families in Labor's last four years, it is abundantly clear that the current situation is unsustainable for families and for government, making it critically important that we shape new policy for the next generation.

I look forward to the Productivity Commission's draft report in July, but for now for this bill we cannot, as I repeatedly stated in the debate for the previous bill, forget the context in which we are all operating today. Labor delivered six budget deficits. They left $123 billion in cumulative deficits ahead and their debt is costing Australians $1 billion a month in interest—effectively, dead money. It gives us no pleasure to have inherited the debt and deficit that we have from Labor. We make no apologies, once again, for addressing the urgent need to manage the nation's finances responsibly and live within our means. The $230 million in savings we seek over four years via this legislation pales into insignificance when compared to the wasted $1 billion in Labor's interest payments that Australian taxpayers have no choice but to pay every month.

Despite Labor's opposition to this government's efforts to clean up their budget mess, this bill, now a stand-alone measure on the childcare benefit, is an important part of that action. We will do the right thing by the Australian people in order to deliver a strong and more prosperous economy. I thank the House.

Debate adjourned.