Monday, 7 December 2020
Private Members' Business
That this House:
(1) notes that under the Government's child care subsidy system:
(a) fees and out of pocket costs are out of control, with the Department of Education predicting that fees will increase by 5.3 per cent in 2020-21;
(b) fees have increased by more than 35 per cent since the election of the Government in 2013;
(c) Australian families contribute 37 per cent of early education and child care costs, compared to the OECD average of 18 per cent;
(d) there is an annual subsidy cap which is a significant barrier to work for many families; and
(e) secondary income earners earn very little take home pay if they go back to work full time;
(2) further notes that recent reports by the Grattan Institute, KPMG, and PwC have found that increased investment in early education and child care would boost Australia's gross domestic product by between $4 billion and $11 billion through increased workforce participation; and
(3) calls on the Government to fix its broken child care subsidy system that has failed to keep a lid on costs and has failed to support working parents, particularly women, to work full time or increase their hours.
Right now there are thousands of parents who can see the end in sight. Their child is at the end of her early preschool education, whether that's family day care, long day care, whatever form it takes. That child's about to head off to big school. The relief in sight? Well it's not that there won't be logistical challenges and maybe before- or after-school care or holiday care, but finally there will be relief from the relentlessness of high child-care fees. These are especially felt at the end of the year because so many families have reached their cap and don't get the financial support they get earlier in the year because somehow it's easier to find money in the lead-up to Christmas. Sure!
These parents don't know it yet, but the cost of before- and after-school care and holiday care is going to be a similar drain. That's a reality that we on the Labor side recognise. Parents are spending a lot of their family budget on child care. I have had many conversations with them about it, and also with grandparents, who are all too aware that the day or two a week they do minding the grandkids makes a huge difference to their family's budget. Parents and grandparents can see the merit of our plan, that is to scrap the subsidy cap, which often leads to families losing money from an extra day's work, lifting the maximum child-care subsidy rate to 90 per cent, and increasing the child-care subsidy to every family earning less than $530,000 a year.
I have also had conversations with people who aren't currently affected by the ever-rising child care costs. I think it's important that we all understand the situation families are facing, because it affects all of us. The current child-care system isn't designed to get everyone back to work. Many parents across all incomes want to go back to work or do more hours but find it isn't worth it because they don't take home enough pay. Many parents lose money when they work that fourth or fifth day, because the subsidy rate is based on the family income. So much for 'If you have a go you get a go.' In child care you don't: you get to go backwards. The proof that child care is too expensive for many families is in the numbers. Only 15 per cent of three-year-olds in Australia attend early learning compared to an average of 69 per cent in other developed countries.
Underpinning our policy on this side of the House is the belief that quality early learning is important for children's development, because we know the brain development that occurs in those early years. On average, Aussie families who are sending their kids to child care pay between 30 and 40 per cent of the household income. The OECD average is just 11 per cent. We are right at the top. Our families are bearing a higher proportion of cost than many other places.
Under Labor's policy more than a million families will be better off, and the greater support also applies to before- and after-school care and holiday care. As an example, a family with an income of $150,000 would be somewhere between $3,000 and $5,300 a year better off under our changes. I say to families, go to our child-care calculator and find out the savings your family would receive from our child-care subsidy reform. It's childcarecalculator.com.au and I'm going to post the link in the comments on Facebook below this speech. It will show you exactly the difference that we can make in your household budget and to your lives.
Let's be clear, while I can feel the relief of parents, this is not a welfare measure. This is about getting people back to work and into work. Cheaper child care is good for the economy, it's good for families and it's good for women. I would add that it's especially good for the kids.
Economists have modelled how much the economy grows with more investment in quality child care. KPMG estimated that child-care reform could generate between 160,000 and 210,000 working days a week, the equivalent of 30,000 to 40,000 full-time jobs. The Grattan Institute research concluded that women with young children will increase their hours of paid work by 13 per cent if the system is reformed to make child care cheaper, and those reports estimate that the consequence could be GDP growth of between $4 billion and $11 billion a year. That's a big kick in the right direction for the economy.
It's fundamental economic reform, something that will deliver immediate support to families. It'll make it easier for women to get back to the work they want to do and it will grow our economy at the time we really need it. These are the sorts of reforms we should be doing now. Clearly, the government has no plans to bring about any sort of reform. They have no ideas, and it's always going to be Labor who comes up with the great ideas and implements them. (Time expired)
As a working mother of four, I'm acutely aware of the pressures working families face each and every day. It can feel like there's not much time to focus on anything other than supporting our families. As a government, we know that accessible and affordable access to child care is a key to allowing women to work full time or start a business. As Australians, we should all be proud of the fact that, prior to COVID, the gender pay gap for women had fallen to a new low and female workforce participation had risen to a record high. As a result of our policies, prior to the COVID-19 pandemic, the female labour force participation rate was a near-record high of 61.2 per cent. Our government has been there and will always be there to help ensure increasing workforce participation, particularly for women. The childcare policies that we initiated in 2018 are working to help get women back into the work force and assist them in realising their dreams.
Our government's commitment to child care is clear. The new childcare package this government introduced in 2018 represents the most significant reforms to the early education and care system in 40 years. In the 2020-21 budget, the government will pay a record $9.2 billion in childcare subsidy payments, and this will grow to $10.7 billion in coming years. Around one million Australian families who are balancing work and parental responsibility are benefiting from this package. The new childcare package is providing more access and more financial support for those who need it most.
The coalition government is providing support for families who need it via the $1.5 billion Child Care Safety Net. Free child care is currently available for eligible vulnerable and disadvantaged families. Free child care is currently available for eligible families experiencing temporary financial hardship. A 95 per cent subsidy payment is currently available for eligible families looking for work. Full-time subsidy payment remains available for parents who have lost their jobs or have reduced hours of work via the relaxed activity test.
Services Australia are doing an outstanding job, with processing times for approved childcare subsidy now averaging around four days. That's something working families need. Importantly, 71 per cent pay no more than $5 per hour in daycare centres, and within that subset 24 per cent pay no more than $2 per hour. Ninety per cent of families using approved child care were entitled to a subsidy rate between 50 and 85 per cent. Around 86 per cent of daycare services were charging at or below the hourly rate cap of $12.20 an hour. Our once-in-a-generation reforms have delivered a 3.2 per cent reduction in out-of-pocket costs to parents since our package was introduced.
However, the member's motion today is misleading. The Department of Education did not provide an estimate on future fees. We can't trust Labor to tell the truth on fees and we can't trust Labor on anything they say about this policy.
Most families do not have an annual cap applied to them. There is no childcare subsidy cap for families with income less than $189,000. Around 84 per cent of families have an income less than $189,000 and no annual cap. The member's bill also states that Australian families contribute 37 per cent of early education and childcare costs compared to the OECD average of 18 per cent. It is true that more work needs to be done in this area, but it is at a similar level to other similarly developed nations. It is important to point out another OECD figure, and that is that the OECD numbers for labour workforce participation for women between 15 and 64 have Australia at 73.9 per cent and Norway at 75.7 per cent. The proportion of GDP that Norway spends on child care is five times the proportion of Australia's spend on child care, to achieve a 1.8 per cent higher labour force participation rate for women.
It is very complex policy area and it is a very complex issue for families, but it is an incredibly important issue. The Morrison government understands that female participation in the workforce is not just key to the individual prosperity of individuals and families but also key to the future prosperity of our great country. On this side, we recognise the importance of affordable and accessible child care and how it promotes workforce participation, growth and female economic empowerment.
I stand to support this motion because child care costs too much, and according to the Department of Education fees are set to increase even further, by 5.3 per cent next year. I commend the member for Macquarie for moving this motion. Put simply, child care costs us all too much. It costs women too much, it costs families too much and it costs our nation too much. In the 12 months to March, my electorate saw childcare costs rise substantially. The increase in my electorate ranged from 4.5 per cent to 21.5 per cent. At a 21.5 per cent yearly increase, the cost of child care would double every three and a half years.
Child care costs so much that many, many parents are forced to work less. Instead of working full-time, a parent, generally the mother, will work only three days or not work at all because the cost of full-time child care is just too great. The consequences of this are significant for our economy, for our productivity and for the health and wellbeing of families, women and children. Kids lose out on their development when their entire education is set back at the first formal step. The economy loses out because the pool of workers is reduced, driving down incomes and consumption. And women lose out, as they bank less superannuation and they're more vulnerable to homelessness and insecurity in their later years. They also can lose confidence in their skills and connection with their network. This is the exact opposite of what we want for women. I have been through it myself and I understand just how frustrating it is. It is not good enough and it needs to change.
Under Labor's plan, announced by the Leader of the Opposition on 8 October, more Aussie kids will be in child care, more women will chose to undertake more work and, importantly, 97 per cent of all families will save up to $2,900 a year—and no family will be worse off. This will be good news for my electorate. When I visit childcare centres and speak to young families in Corangamite, they tell me that the cost of child care is exorbitant and limiting and unfairly impacts on women. I recently spoke to Grovedale mum Pawandeep Gill. She wants her young girl to experience the benefits of an early childhood education but, under the current model, the childcare costs that come with working another day a week greatly outweigh what she will earn in aged care. This is the exact opposite of what we want for Pawandeep and for all women. Unlike those opposite, we want women to achieve their potential. Pawandeep should be allowed to choose. All families in Corangamite and Australia should be allowed to choose.
So let's be constructive. We can fix this, and Labor has a plan. Labor announced that an Albanese government would introduce the working family childcare boost to cut childcare fees and put more money in the pockets of working families straightaway. Childcare fees in Australia are some of the highest in the world. Under this plan, Labor will scrap the $10,560 childcare subsidy cap which often sees women losing money from an extra days work, fix the maximum childcare subsidy rate to 90 per cent and increase childcare subsidy rates and taper them for every family earning less than half a million dollars a year. This means that 97 per cent of all families will save between $600 and $2,900 a year.
Under Labor's system, many primary carers across my electorate will choose to work more, and the local economy will benefit by tens of millions of dollars every year as a result. As KPMG points out, increased investment in early education and child care would boost our gross economic domestic product by between $4 billion and $11 billion through increased workforce participation. In contrast, the Morrison government's broken childcare subsidy system has failed to keep a lid on the costs. Economists in Corangamite are calling for this reform. Business owners in Corangamite are calling for this reform. Women and children and families in Corangamite are calling for this reform. So I stand with the member for Macquarie and call on the Morrison government to fix its broken childcare subsidy system. Families should be able to afford child care for their kids, and women should be given the opportunities they deserve, to strive and reach their potential. It makes absolute sense—so let's make it happen.
I thank the member for Macquarie for her motion raising the very important issue of child care in this chamber today. This is a policy area that I've spoken on a number of times in this place both from my own experience, as someone who has utilised the system for many, many years with my own five children, and also because of the challenges raised with me by constituents in my northern Tasmanian community.
As I've said before, while cost is important, a sole focus on the cost of child care is somewhat short-sighted, in my view. You can have the cheapest child care in the world, but you still need to be able to access it. From my discussions in the regional community which I represent, there is an accessibility issue particularly for parents who work shift work and single parents. In particular, I've heard from parents who wanted to take up work as seasonal fruit pickers but couldn't find suitable care to cover the early starts and the hours involved. I'm continuing to advocate for my community on this issue, and I'd like to thank Minister Tehan for his willingness to listen to me and a number of my colleagues who have raised similar childcare issues. These include my colleague who we've just heard from, the member for Higgins, Dr Katie Allen, who is exploring ways that families could opt for childcare arrangements that would better suit their family rather than standard day care, which can be limiting for many families, depending on where they work or live. As Dr Allen has said, every woman going to work should have the choice to access the type of care for their child that is right for them and their family. Whilst I certainly don't deny that child care can be a financial challenge for parents—and I speak from experience—it's a bit rich for those on that side to criticise the government, when fees increased by 53 per cent when they themselves were in government.
The Morrison government has delivered on changes targeting and assisting those families who need it most. We introduced a new, once-in-a-generation childcare package in 2018 with significant reforms that saw out-of-pocket costs fall. Thanks to these reforms, the ABS CPI data reports that costs to families remain 3.2 per cent lower than under the previous childcare package. The system designed by the government is targeted, assisting those who need it the most, with those who earn the least receiving the highest level of subsidy at 85 per cent. Over 70 per cent of families have out-of-pocket costs of less than $5 per hour per child, and nearly a quarter are paying less than $2 per hour per child for centre based care. The Morrison government continues to invest record amounts in child care, with another $9.2 billion in this financial year which will grow to $10.7 billion in coming years. The current subsidies have supported families during an all-time high in women's workforce participation: 61½ per cent in January 2020, up from 58.7 per cent in September 2013. Of course, I acknowledge that these numbers have dipped during the pandemic, but it is worth noting that 61.8 per cent of jobs created since May have been filled by women.
This brings me to another point: I note that the majority of the speakers on this motion are women. I think that reflects a part of the problem. I've stated in the past and it still holds true that the rhetoric around child care and parental leave measures is frustrating, given that these are measures that do not only impact women. I certainly understand, though, that this often does end up being a woman's responsibility. There are a number of statistics that indicate that child care disproportionately affects women, and likely a lot of anecdotal evidence as well. But I think we in the House have a duty of care to frame this issue as one that is shared by both parents. Child care is an incredibly complex issue and one that our government has spent a considerable amount of time and money on effectively addressing. It has resulted in significant positive change. However, our work lives are dynamic and changeable, and child care needs to be able to respond. There needs to be more to be done around flexibility, availability and equitable access, and I'm hopeful we can turn our minds to these issues rather than focusing solely on cost.
High-quality, accessible child care and early education is a non-negotiable ingredient for strong communities and economies. The evidence for this is clear and uncontested. Children who access quality child care and early education are safer and healthier, they develop advanced social skills and are better placed to thrive in the education system in later years. Child care also promotes greater family cohesion and workforce participation. When delivered in a way that understands modern families, child care opens doors for parents—and I acknowledge the member for Bass's statement—mostly for women, to access social opportunities and higher family income through employment, training or study. Publication after publication proves that. When done right, the social and economic marginal benefits of high-quality child care far outstrips corresponding costs. With this knowledge, we should be doing all we can to expand the childcare sector and reform the childcare subsidy scheme to maximise access, especially for families who are disadvantaged and stand to benefit the most.
Unfortunately, this is not the case at present. According to the most recent ABS data, released in 2017, just under 50 per cent of the 30,000 families in my electorate of Indi accessed one day or more of child care per week. This is not enough. The studies referred to by the member for Macquarie in this motion, from the Grattan Institute, KPMG, PwC and others, including the Australian Institute of Family Studies, show that demand for affordable child care far outstrips access and supply across the nation, especially in the regions. In 2018, 21.8 per cent of residents in the Mansfield and Murrindindi Shires, in the heart of my electorate Indi, rated access to child care as poor or very poor. That's a whole 10 per cent more than the national average and even more when compared to our city cousins. But we don't need statistics to tell us that children in the regions are missing out; we just need to listen to what's being said amongst parents on the sidelines of the playgrounds or between a parent working part time and their boss when they cannot commit to more hours in the office. It's the families themselves, who want the best for their children, that know more can be done and that they are missing out.
I have a vision for universal child care and early education in this country. I congratulate the opposition for announcing similar in their budget reply. Now is the time to turn our attention to the nuts and bolts of reform. The Grattan Institute, for example, recommends lifting the childcare subsidy to 95 per cent before tapering and removing the annual cap. Back in June, I formally costed that policy through the Parliamentary Budget Office. The PBO estimates that raising the subsidy would decrease the fiscal balance by just over $1 billion per year. That figure pales in comparison to the $11 billion per year increase in GDP that the Grattan Institute estimates will flow from increased workforce participation and induced demand in the economy—an injection on par with cutting the company tax rate to 25 per cent. When you look at the nuts and bolts, it's a no brainer.
I've heard from many of the 130 childcare providers across my electorate this year, especially those who were unfairly hit by loopholes in the government's initial economic response to the pandemic in the first half of the year. If we are earnest about building back stronger, we should also be investing in capital works for childcare facilities, like the Mansfield Kindergarten, who are desperate to expand their service delivery and meet the demand of growing families in that region, or accelerating access to vocational training and qualifications for those hit by record unemployment rates to fully resource the sector, or backing in private providers like Kiewa Valley Kids in Tangambalanga, or supporting the expansion of innovative practices that have snowballing social benefits, such as for the loneliness epidemic creeping across this nation.
In October, I was delighted to meet with Reverend John Parkes, Trisha Glass and Sarah Garneau from Little Yacks at Yackandandah at one of my Indi budget breakfast roundtables. Little Yacks run a terrific intergenerational program with the local aged-care centre. This brightens the day of children and the elderly alike through fun, relaxed and educational sessions. It's modelled on successful programs in the Netherlands and could be rolled out right across this country if we committed to innovation and vision for this sector. High-quality, accessible child care and early education are non-negotiable for regional communities and economies like Indi. The return on investment is massive and I am committed to working with colleagues in this place from all sides to reform the childcare subsidy scheme to ensure we can all enjoy its benefits.
I rise to support this motion. Studies have shown that Australian parents pay almost four times as much as their international counterparts for child care. This often forces parents, primarily women, out of the workforce and leaves children without a head start in learning at an important age, that very young age when it makes all the difference. The child care subsidy is means tested, but for many families child care often remains far too expensive. This results in what has been referred to as the 1.5 earner model, where, usually, the father works full-time and the mother part-time. It's also estimated that Australian families sending their children to child care pay on average between 30 and 40 per cent of their household income to do so. The OECD average is 11 per cent and we are paying on average between 30 and 40 per cent. That is way too high. This results in the sad fact that just 15 per cent of three-year-olds in Australia attend early learning. It's not just child care; it's early learning at an age when the child's brain is like a sponge; it picks up many, many things. It's the easiest time in life to learn. The more they learn at that point, the more they'll cope with their education when they get older, the more likelihood they have of employment and the more likelihood they have of a higher education. It makes an enormous difference if children are learning at that age.
Those figures that I just gave about the difference between OECD and Australia result in the sad fact, as I said, that only 15 per cent of three-year-olds attend early learning, compared to an average of 69 per cent in other developed countries. We are lagging way behind. Too many children are missing out and too many are not getting the early learning opportunities because parents just cannot afford them. We need to take a good look at our Child Care Subsidy System and consider how we can better help families with their rising living costs. I'm very pleased that the Leader of the Opposition, Anthony Albanese, and the member for Kingston, Amanda Rishworth, have done so. They have put together a package that will assist families. It'll assist mums and dads to get the child care that they deserve.
Labor has always been at the forefront of such important social reform. In fact, it was the Whitlam government in 1974 that announced Australia's first right of access to child care for every family in Australia. This was groundbreaking reform back then, and today we on this side of the House want to continue improving access to and the cost of child care for Australian families. The good, big reforms that help and assist people have always been announced by Labor and implemented by Labor, whether it be Medicare, universal health or the NDIS, and the list goes on and on. The proposal that the Labor Party has at the moment is, again, one of those major reforms that will assist families. It will assist mums and dads but, most importantly, it will assist children to learn and enable them to take part in the process. All the science and all the educational professionals tell us that the earlier a child starts learning the better off it will be for their education in years to come.
In my electorate of Adelaide, for example, families have seen costs rise by four and almost five per cent over only the last 12 months, while wage growth in this country is currently at its lowest in history. It is unacceptable to see a four to five per cent increase in child care costs and a wage growth of zero. These figures show clearly that the support of the child care subsidy, which is indexed to the CPI, is failing to keep up with out-of-control fee increases. Addressing the child care subsidy seems like an obvious way to lighten the load. It will help in productivity. It'll help parents going back to work. It'll help children in their education.
I hear from so many families in my electorate about how they are struggling to pay child care and to make ends meet. I've also hosted a childcare forum with providers in my electorate. Everyone is unanimous that the system needs reform. What's more, the current childcare system is not designed to get everyone back to work. Many women across all income levels want to go back to work, but they do more hours only to find that it isn't worth it because they don't take home enough pay. It's about time we fixed this. This is a fundamental and important reform that would help us recover. (Time expired)
I rise to enter the debate today to talk about an important issue that not only affects families and cost of living issues in my electorate, but I believe in every electorate in Australia. Today's motion enables us to have a conversation in the parliament, to have a debate—if the government decided to defend their positions instead of giving up in this debate today—to talk about the No. 1 issue that is raised with me by families, which is the spiralling cost of child care in this country. Child care is not affordable in this country. This is the feedback that every Labor member of parliament has heard from the night of the Leader of the Opposition's budget reply, where he put the cost of child care firmly and squarely on the government's agenda. We've heard nothing from the Morrison government. Just last week the first visit that the Leader of the Opposition did was to fly to the electorate of Blair, my neighbour—I note that the member for Blair is here in the chamber—to hear firsthand from parents and early educators about the costs of child care in Ipswich. Ipswich is made up of many thousands of families that are groaning under the child care costs of this government.
The department of education estimates that fees in this country will increase by 5.3 per cent in 2021. But fees have already increased by 35 per cent since the election of the Morrison, Turnbull and Abbott governments back in 2013. Thirty-seven per cent of early education and child-care costs are average around Australia, which is compared to the OECD average of 18 per cent.
We know there is an annual subsidy cap, which is a barrier to many parents. We've all sat at kitchen tables or visited parents who all say the same thing: 'I'm working just to pay child-care costs'. We see that time and time again. That's why I'm so pleased that federal Labor is tackling this issue, is laying out a comprehensive plan to deal with the costs of child care in this country. Today the Leader of the Opposition, alongside our hard-working shadow minister and local member, Alicia Payne, launched the childcare calculator. Australian families can find out how much cheaper child care will be under an Albanese Labor government. This new website is a useful tool for the over one million families that will better off under Labor's cheaper child care for working families plan.
There are a couple of key tenets that I want to bring to the attention of the House today. Under our plan, Labor will scrap the $10,560 child-care subsidy cap, which often sees women losing money from a day's work. It's the same old conversation: 'I'm only working to pay for the child care'. We want that to be an economic driver and an economic benefit to this country; to lift the maximum child care subsidy rate to 90 per cent and increase child-care subsidy rates and taper them for every family earning less than $530,000.
What that means is that child care under a future Labor government will be more affordable for 97 per cent of families in the system. It will remove the financial barriers that disincentivise second income earners, predominantly women, to work full time. Our plan is to fix Australia's broken child-care system, which currently locks out 100,000 families because they can't afford it. I know, in the growth corridor that I represent and share with the member for Blair, we hear this time and again when we visit with mums and bubs groups, when we sit down at the Springfield Lakes YMCA, when I visit child-care centres, when I talk to advocates, they all say the same thing: it's time the broken system was fixed.
That's exactly what Labor will do. This is an economic issue; it's a productivity issue; but it's also a life-family balance issue. We want to see more people participating in the economy. Heaven knows, after the year we've had, that we owe it to families to help them get back on their feet.
In my remaining remarks I want to acknowledge the incredible effort that early educators provided in this country during the pandemic. Thrown on the scrap heap by this government, the first to be cut from JobKeeper, but valued, supported and recognised every step of the way by this side of the chamber for the outstanding work that they do contributing to our economy.