House debates

Wednesday, 4 August 2021


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

12:14 pm

Photo of Andrew LeighAndrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Minister for Treasury) Share this | | Hansard source

I rise to speak on the Family Assistance Legislation Amendment (Child Care Subsidy) Bill 2021 and, because the member for Kingston is appearing by video presence, on her behalf, I move:

That all words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading, the House notes that:

(1) most families receive no extra support from the Government's changes to the child care subsidy;

(2) the Government's changes do nothing to stop out of control child care fees;

(3) the workforce participation rate is projected to decline over the forward estimates; and

(4) Australia ranks 37 out of 41 OECD countries for child care affordability".

The female labour force participation rate in Australia is higher than the OECD average but so is the share of Australian women working part time. We know very clearly that childcare access is a core driver of women's labour force participation. You see this in studies that look across countries. You see this in individual studies by economists who have looked at particular policy reforms, such as Quebec's $5 a day early childhood or policy changes in Washington DC. It's very clear that, if you want to increase women's labour force participation rates—which isn't just an equity issue; it's also a productivity issue about getting the most out of the productive capacity of the Australian workforce—then you need to tackle early childhood. But the coalition's policy applies only to some families in need. There are, according to Labor's analysis of Parliamentary Budget Office work, 860,000 families—86 per cent of all families with children aged under six in the system—who are better off under Labor's policy compared with the coalition's. Indeed, every single family with one child aged five or under in child care—some 727,000 families—will receive absolutely no lift in their childcare subsidy rate under the Liberals, but, so long as their incomes are below the threshold, they will benefit from Labor's.

Labor's policies will do more to boost women's labour force participation—a critical issue for Australia. It is currently the case, according to a UNICEF report entitled Where do rich countries stand on childcare?, that Australia ranks 37th out of 41 countries. UNICEF found that Australia was one of only eight countries where child care consumes at least a quarter of the average wage, which is why the Leader of the Opposition made early childhood a focus of last year's budget reply and why the government, belatedly, had childcare reforms as part of this budget. But, as so often happens with the coalition, whether it's JobKeeper or vaccination, the government seems to have an uncanny ability to take a good idea and muck it up. As the Grattan Institute has said very clearly in comparing the two sets of policies:

… Labor's policy is broader, with all families who use child care standing to gain, regardless of the number of children, their age and the family income.

The Grattan Institute goes on to say of Labor's policy:

… it would also have bigger benefits, sharpening workforce incentives for a much wider group of families. The boost to GDP from higher workforce participation is likely to also be about three times bigger.

The institute points out that, in terms of the impact on family budgets, the big difference is that the government's policy affects families with multiple children aged under six in care, whereas Labor's policy extends it to families with one child in care. It points out that making such an investment is important for women's workforce participation and long-term economic security, but it's also critical to Australia's productivity.

Labor will continue to stand on the side of improved accessibility to child care. We will support the modest changes in this bill, which reflect those announced on budget night, but we believe the government has to go much further if we are to achieve the kind of egalitarian, high-productivity society that Labor so strongly supports.

Photo of Julie OwensJulie Owens (Parramatta, Australian Labor Party) Share this | | Hansard source

Is the amendment seconded?

Photo of Terri ButlerTerri Butler (Griffith, Australian Labor Party, Shadow Minister for the Environment and Water) Share this | | Hansard source

I second the amendment and reserve my right to speak.

12:19 pm

Photo of Katie AllenKatie Allen (Higgins, Liberal Party) Share this | | Hansard source

Many of us in the House are working parents. We know the challenges that face us when we need to return to work and the juggle of a young family and a career. Whether those challenges are financial or emotional, we know it can be difficult on the family. Therefore, it's a great privilege to be in this House to debate a bill, the Family Assistance Legislation Amendment (Child Care Subsidy) Bill 2021, that will provide much-needed assistance and choice to families right across Australia. I'm proud for all of us here in the chamber, because we all care about not only a productive and efficient economy but also families that are happy and supportive for their children.

In this year's budget, the Morrison government committed to making child care more affordable and, by doing so, providing more choices for families. I'm pleased for the women of Australia and for my daughters and those that follow behind us. That's what this bill is basically doing. Research demonstrates that development during early child care sets either a sturdy or a fragile state for what follows. The Morrison government understands this and will continue to provide and expand subsidy for quality child care to the benefits of parents now and children in generations to come. As a previous paediatrician, I understand the value of child care and quality child care for children, for their best start to life.

The issue of the gender workforce participation rate is also a pivotal concern to the Morrison government. Female workforce participation is currently 67.6 per cent. The Morrison government's policies have enabled this rate to be at its highest in the last 10 years. But it still lags behind men's participation. We need to keep working to narrow the female workforce participation gap. We know that the three Ps—participation, population and productivity—are the keys to a strong economy. This is important now more than ever in our post-COVID era.

We know that an increase in childcare costs is correlated with reduced female employment. In a time when women have been hit so disproportionately hard by the COVID pandemic, the Morrison government recognises the need for more support and will deliver that with this bill. These changes will see 250,000 families pay fewer out-of-pocket costs due to these changes. If not for the removal of the current income cap, there would continue to be a disincentive for a second earner to undertake work by not only paying high childcare fees but receiving fewer childcare subsidies and fewer family tax incentives, and paying more income tax. The Morrison government wants to encourage workforce participation, particularly among women who would otherwise be held back from the workforce without this bill—women who want to make sure that they make an impact on the workforce well beyond the time that they spend with their children, to be able to balance that and know that the government has their back.

A 2008 survey saw 127,000 women across Australia cite caring for children as their reason for not looking for work or seeking more hours. This bill provides support for those very people by removing the cap that currently sees parents limited in their access to affordable early learning and care. The majority of additional subsidy will go into the pockets of low- and middle-income earners, with Australia's lowest income earners those that need it most, privy to the highest rate of subsidy.

Our government policies are already working. This bill before us will again help increase female participation. Results in June this year show that participation is up and that underemployment is down. There were 115,000 new jobs created, 85 per cent of which were full-time jobs. Most importantly, of those 115,000 new jobs around 60 per cent went to women. These figures show that there are more women in work than ever before, and the numbers should give Australians confidence that the Morrison government's economic plan is working.

The Morrison government's investment into child care will target low- and middle-income earners, putting money back in families' pockets. The bill before us targets additional support to all eligible Australian families with more than one child aged under six in child care. This means around 250,000 families will benefit. That translates to an average of $2,260 per year. What a huge difference that will make to a young Australian family.

Everyone knows, when you've got young children, the costs are enormous not just for child care but for all sorts of things, and to have that little bit of comfort that childcare costs will be supported will make such a difference to families. But, importantly, with these amendments, it removes the disincentives to work while maintaining the principles of the system. The amendment before us today targets families who need it most. Child care for younger children is more costly, and because of this it can limit choices for parents when considering whether to take on that extra time in the workplace. This is particularly so when families have more than one child aged under six. Any parent knows what a busy time it is for a young family. These families are also more likely to be working less with lower incomes and higher childcare costs compared to families with older children, and that's why we intend on making positive changes for Australian families through this amendment.

This amendment is slated to come into effect in July 2022. By July 2022, we will increase the childcare subsidy available to families with more than one child. The level of subsidy will increase by 30 percentage points to a maximum subsidy of 95 per cent of fees paid for their second and subsequent child. Around 50 per cent of families who benefit from the measure will receive the maximum 95 per cent subsidy for their second and subsequent child. This will make a significant difference. Around 95 per cent of families who benefit from the measure will receive a subsidy of at least 80 per cent for their second and subsequent child. Importantly, we will remove the $10,560 annual cap on the childcare subsidy for families earning over $189,000, and that will benefit a further 18,000 families. This will ensure families with multiple children don't exhaust their childcare subsidy cap sooner in the year for younger children. These changes will put more money in the hands of Australian families, particularly those who are already dealing with childcare costs. This is a core principle of our childcare subsidy.

The activity test, importantly, does remain in place to ensure families must be undertaking activity, and that's because we want to encourage people to use the childcare subsidy to help them get into work, to help them undertake training or to help them to study so that they can be eligible for the workforce going forward. These measures reduce workforce disincentives for families and encourage parents, especially second income earners who are more often women, to go back to work or to work more, if they choose to, or to get more training so they can be ready for the workforce. Sixty per cent of the additional investment goes to families earning under $180,000. The maximum childcare subsidy rate will increase to 95 per cent for these families and the total subsidy will be important for those who have two children in care. Those who earn the least will receive the most.

As I said before, we plan to remove the annual cap, and this is a core component because this actually creates a disincentive for increased workforce participation. In the past, once a family hit the annual cap, they were required to pay 100 per cent of childcare fees. This results in large effective marginal tax rates and the possibility of significant debts, and this shouldn't be underestimated. If they've got this incorrect, this can actually result in large debts, even if it's by a small amount. Not removing the annual cap will maintain and, in some cases, increase workforce disincentives where a family has a combined income over $189,000. This previously would have negated any extra benefit generated by the increased subsidy.

I have been asked about why we have to wait for the measure to be implemented with this announcement. The reason for this is these measures require several things to be taken into account. They require the development of business requirements to inform the underpinning IT system changes, they require a complex technical build by Services Australia, and they require complementary changes for the software providers and their systems to support the childcare sector. The implementation lead time takes into consideration time to communicate changes with the childcare sector as well as for software providers to build and test their changes to ensure a smooth transition to the new system. This means that these changes will be ready to be implemented by July 2022.

The bill before us today clearly shows the Morrison government is committed to delivering more affordable child care and choice for Australian families. This bill is yet another example that the Morrison government has the back of all families, that we understand how important getting women into the workforce is, but also, more importantly, maintaining them in the workforce. I know, seeing so many of my friends and colleagues moving in and out of the workforce, how having that continuity and support for early child care, and ensuring that it is of good quality and of great accessibility, is important to all women in Australia.

12:30 pm

Photo of Amanda RishworthAmanda Rishworth (Kingston, Australian Labor Party, Shadow Minister for Early Childhood Education) Share this | | Hansard source

[by video link] I am very pleased to be able to get the opportunity to speak on the Family Assistance Legislation Amendment (Child Care Subsidy) Bill 2021 because, as most people would be aware, I'm always very happy to debate early learning and care in the House of Representatives. I am surprised by the urgency that the government is placing on this bill to get it through the parliament considering that the start date for support for families outlined in the bill does not come into effect until 1 July 2022. Yes, that's correct, 2022, after the next budget—probably after an election—is when any assistance will flow. This bill is not responding to immediate financial relief that Australians need right now and Australian families need right now. Australian families are groaning under the burden of the cost of child care. This bill, finally, is some acknowledgement by the Morrison-Joyce government that family budgets are being hammered as a result of childcare costs. But, unfortunately, this bill only tinkers, providing support for just a minority of families using the system, with hundreds of thousands of families receiving no support at all.

I note that the member for Fenner has moved a second reading amendment. This is a very important second reading amendment that does really clearly demonstrate that this government is failing when it comes to the support provided in this bill. We've had the government waste a lot of oxygen trying to deny that childcare fees are an issue. We've heard them day after day for the last three years telling Australian families that child care has never been cheaper and that the system that the Prime Minister himself designed is just fine. However, this is just not the experience, the lived experience, of families around Australia. We know that long day care fees went up by four per cent in 2020. This includes four months of free child care and then a period in which fees were frozen by the government. This was at the same time as CPI was just 0.9 per cent. The fees have hiked 9.3 per cent under the Prime Minister's new childcare subsidy in just over 2½ years, according to the most recent published data. And fees are now up 37.2 per cent since the election of the Liberal government.

The government doesn't like to talk about this data. In fact, the government regularly wants to talk about a different index. They regularly want to talk about the ABS index, the out-of-pocket costs index, so let's talk about that index. It is true that the index showed a fall in out-of-pocket costs when the new system was introduced in July 2018. But any benefit from this system has now been completely eroded just three years later with the increase in fees eclipsing the index of the subsidy, with the latest ABS figures showing that the average out-of-pocket costs are now higher for families than ever before. Out-of-pocket costs are now at a record high.

Any way you cut it—whether you want to look at the increase in fees, whether you want to look at the out-of-pocket costs—fees and out-of-pocket costs are out of control for Australian families. They are eating a bigger and bigger hole into household budgets and putting more financial strain on Australian families. It is holding families back from working. There are almost 100,000 families not working directly as a result of the cost of child care. It is hampering workforce participation. It is holding second income earners, usually women, back from working the hours they want and need.

The cost of child care is having a real impact in other ways. Research released in June by The Front Project, based on a survey of 1,700 families, found that 73 per cent of families say the cost of child care is a barrier to them having more children. Fifty-two per cent agreed that once the cost of child care was factored in it was hardly worth working. Labor knows that this system, a system that the Prime Minister designed, is not working for Australian families. That is why we've announced an ambitious plan to make child care cheaper for a million families. After months of belittling Labor's plan and bragging about the current system, the Morrison government has been dragged kicking and screaming to introduce this bill to make modest changes in just under a year's time.

Turning to the main features of the bill, schedule 1 removes the annual childcare subsidy cap from the family assistance act. So there will no longer be a limit on the amount of subsidy that families can receive in a year. The annual cap was a terrible policy. It was a serious barrier to the second income earner in a family, usually a woman, working the hours they wanted and needed. It was a terrible idea to include it in the new system and nobody recommended it. The Productivity Commission certainly didn't when in 2015 they were asked by the government to design a new subsidy system. They didn't include in it their system, so who actually came up with the idea of this annual cap, which now everyone seems to be decrying? It was the then Minister for Social Services, the current Prime Minister. Abolishing the Morrison cap is a great idea. It's so great that Labor had already announced that, if elected, we would introduce it as a policy. However, why families must wait until July 2022 for this relief is beyond me. While the government say that other changes in this bill will require significant IT changes, and that is the reason the start date has been delayed, I cannot see why they can't immediately remove the annual cap for families, as that would not require significant IT changes at all.

The amendments in schedule 2 will increase the rate of the childcare subsidy by 30 percentage points for second and subsequent children under the age of six, up to a maximum rate of 95 per cent. This measure will be implemented through a two-phase approach to ensure implementation occurs as soon as possible but allowing sufficient time for the necessary system to be built. Also, it is to ensure integrity measures are put into the new system. These changes to the subsidy do provide extra support for some families for a short period of time.

Labor will support the bill, because if the government manage to get the IT changes in place they maybe will introduce the changes before 1 July 2022, but it is disappointing that the government has not provided more support. The government's pre-budget announcement promised much, but the bill has failed to deliver. Like everything with the government, they focused more on getting the announcement right than they did on getting the policy right. They even made a childcare centre open on a Sunday to get kids playing in the background so that they could get the announcement up on Sunday night TV. The problem is that this bill will see hundreds of thousands of families not get any extra help. Three-quarters of families in the system will get no extra childcare subsidy. The government has announced a complex and restrictive policy that benefits only families with at least two children below school age in care. Parents will need a mathematics degree to understand how their family interacts with the new government system—which child will attract a lower subsidy, which child will attract a higher subsidy—and when children go to school that all gets re-ordered.

It is a pity that the government has not just adopted Labor's proposal, which would have delivered three times the boost to GDP. An analysis of the Labor and Liberal childcare policies—both of which, might I add, have the same start date, 1 July 2022—shows unequivocally that Labor's policy provides more support for more families for longer. Eighty-six per cent of families with school-aged children under six in the system are better off under Labor's proposal. Every single family with one child aged five and under in child care—that's 727,000 families—on a combined family income of less than $530,000 will receive absolutely no lift in their childcare subsidy. But they will, of course, under Labor's plan. The vast majority of families with a combined family income of between $69,806 and $174,806 with two children in care will be better off under Labor. And any extra support that the Liberals do provide in this bill to families with two children will be only temporary, as it will be ripped away when the family's oldest child goes to school. In contrast, Labor's boost in support will be provided to every child for the entire time that they are in child care—and, indeed, in after-school-hours care. We'll also get the ACCC to design a price regulation mechanism to shed light on costs and fees and drive them down for good. The Productivity Commission will also conduct a comprehensive review of the sector with the aim of implementing a universal 90 per cent subsidy for all families if Labor is elected at the next election. That is real reform. That is not just tinkering around the edges like we are seeing in this bill. Labor's plan, if we're elected at the next election, will be good for families and good for the economy.

Labor will support this bill because something is better than nothing. Anything that helps even a small number of families is worth supporting. But Labor has a better alternative. If we are elected, we will introduce a system that provides real support to families. But it is no wonder that the government doesn't want to talk about their childcare policy any more. I have not seen any press conferences or any ministers stand up and proactively want to talk about this policy because they know it pales in comparison with Labor's policy.

The government's own budget papers show that workforce participation rates will fall even after these changes. We need to get Australians back working the hours they want and need, as we recover from this pandemic, and early learning and care are such critical parts of that. We believe it, on the Labor side. But of course in the Morrison-Joyce government certainly there are some members who don't.

Now, we know that some of those on the government benches still seem to think that early education and care are just glorified expensive babysitting. We know this, because they've said it. When the minister tried to get party room approval for this legislation, we heard what the men of the Morrison government really think about childcare and women going back to work. We heard how one MP in the party room called working women using childcare an outsourcing of parenting. Another said women might be forced back to work if there was increased support for child care. We know that the women of the coalition party room had to remind their male colleagues to respect women who choose to return to work and that child care was about providing equality of opportunity for working families. They also had to remind the men that young families are under a great deal of stress and we shouldn't judge them for their choices. Well, I don't envy the women in the coalition party room, who have to, in this day and age, teach their male colleagues about the basics of gender equality and the basic real lived experience of families and what families are going through. What century are we in? It is 2021, and we have members of the Morrison-Joyce government shaming parents for using childcare and needing a reminder to respect the right of women to choose how they balance their work and family life. This is just completely and utterly archaic and shows just how out of touch members of this government are. Those who have argued that there need to be incentives for women to stay at home—which has happened in the coalition party room—completely ignore the structural workforce disincentives that they have created because of record high childcare fees.

Working families struggle every day to balance the demands of home and work. Household budgets are stretched thinner and thinner, with stagnant wages, growing costs of living and soaring out-of-pocket costs. At the same time so many parents, especially mothers, struggle internally with the competing priorities of raising their children and earning enough money to put food on the table. The very last thing that families and women need is the government shaming them and judging them for their choices. I have a message for those in the coalition, those in the Morrison government: women who work are not bad parents—they're not outsourcing their parenting.

Nobody can trust this government to deliver a childcare system that truly works for them as we emerge from this pandemic—one that truly gives choice and doesn't embed financial disincentives for actually working extra days. But those on the government benches are still, in their party room today in 2021, debating the merits of investing in child care at all. Only Labor has a plan for reform of the childcare system which works in the best interests of families and delivers real and lasting support.

So we will support this bill—a damp squib is better than no squib at all—but we think it should go a lot further. This legislation is not being enacted until 1 July 2022, and no doubt there will be an election before then. There will be a choice on the table: the Australian people have an opportunity to choose whether they will endorse a limp, non-reformist agenda of the childcare system or cheaper child care for Australian families which helps them get back to work, grows the economy and helps businesses to get back on their feet. That will be the choice. Labor stands for better child care; the Liberal Party has tinkered around the edges and has not delivered long-lasting reform with this piece of legislation.

12:47 pm

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

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

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

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

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

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

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

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

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

12:54 pm

Photo of Matt ThistlethwaiteMatt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Assistant Minister for the Republic) Share this | | Hansard source

[by video link] The interesting thing about this pandemic if you watch the nightly news is that the majority of people that you see that are working during the pandemic are women. They are the nurses that are doing the swabbing of patients at our COVID testing clinics, our early child educators that are continuing to educate our kids and the teachers that are doing the work ensuring that our kids continue to learn. Indeed, in many cases, women are the ones who are doing most of the work when it comes to the home schooling of our kids. Women really are our COVID heroes and have helped our economy get through this very difficult period.

One of those groups of workers where the workforce predominantly is female is in early childhood education and family day care. It is a vitally important service that predominantly women deliver for our community. It is very, very important for the productivity of our nation. Ensuring that we have a workable and accessible childcare industry is the key to ensuring that more family members, particularly women, are able to return to work after they have a child and participate productively in our economy. There have been several Productivity Commission reports that have recommended and seen the benefits of making child care more accessible and affordable for Australian workers.

That's something that's been coming through in the consultations that I've been doing in the community that I represent. The cost of living is a huge issue for families not only in my community but also across Australia, and a large contributor to the cost-of-living pressures that families are feeling is the cost of childcare fees. That's why Labor worked with parents, with early child educators and with associations to put together our 'fairer childcare policy', which would see real reductions in the cost of child care and improvements in the accessibility of child care to ensure that more parents, particularly women, get access to the workforce.

Labor, of course, supports the reforms that are contained in this bill, the Family Assistance Legislation Amendment (Child Care Subsidy) Bill 2021, which implements the government's changes to the childcare subsidy that were announced in the budget on 2 May. The main feature of this bill is the removal of the annual childcare subsidy cap which limits the amount of childcare subsidy that some families can receive in a year. The bill also increases the childcare subsidy rate for families with multiple children under six years of age. We know that the cost of child care is a massive restraint on our economy and will remain a significant roadblock to the recovery from this pandemic. The latest Australian Bureau of Statistics data, last month, showed that 138,700 Australians were not working because they simply cannot access affordable child care. Of that, 92 per cent are women, about 127,600. The data also presents further evidence of the expensive nature of Australia's childcare costs that are preventing parents, particularly women, from working the hours that they want to contribute to our economy.

It is clear that out-of-pocket child care costs are out of control under the Morrison government. Their half-hearted childcare policy falls abysmally short of what's required to provide genuine relief for families. The government's policy will only provide a small amount of relief for a small minority of families for a short amount of time. The vast majority of families get absolutely no additional childcare subsidy support under this government's plan. In contrast, Labor has listened to the concerns of parents, and our plan will bring down the cost of child care and keep it down for 97 per cent of families. The Morrison government's rhetoric and spin around their childcare announcement has been smashed by the new data. Analysis of the competing policies, of Labor's policy and the government's childcare policy, shows unequivocally that Labor's policy provides more support for families and for a longer period of time.

There are 860,000 families—which is 86 per cent of all families with children under six in the system—who would be better off under Labor's policies compared with the Liberals' policies. Every single family with one child aged five or under in child care—that's 727,000 families—and with a combined family income of less than $530,000 will receive absolutely no lift in their childcare subsidy rate under the Liberals' policy, but they will under Labor's policy. Our analysis busts the government's spin that their policy is better at supporting families with two children and better at supporting low- to middle-income families. The vast majority of families with a combined family income of between $69,806 and $174,806 with two children in child care will be better off under Labor. Any extra support the Liberals do provide family with two children will be temporary. It will be ripped away when the family's oldest child goes to school. In contrast, Labor's boost in support will be provided to every child for the entire time that they are in child care. Labor's childcare plan will leave one million families better off than they are now—four times as many as under the government's proposal.

Our plan to provide more support to families for longer will also result in a boost to GDP that is three times larger than it would be under the Liberals. With both policies set to start in July 2022, Australian families will go to the ballot box at the next election with a clear choice between competing childcare policies, with Labor's policy clearly superior on any independent analysis. We know that childcare fees are too expensive and are out of control. These fees are a cost burden and a big contributor to pressure on household budgets for most families throughout the country. Under this government Australian families are paying more in out-of-pocket costs for child care than ever before. The cost of child care is now higher than it was under the previous childcare system. That's an important point to make: the cost of child care is now 0.3 per cent higher than it was under the previous system—and the government spruiked that this was a reform that would reduce costs. It's actually had the opposite effect. Parents need a real plan to tackle the skyrocketing out-of-pocket costs associated with child care.

The Productivity Commission's 2021 Report on government services has also shown that childcare costs are locking Australian parents out of the workforce. The data reveals that almost 300,000 Australians are not in the labour force, due to caring for children. That's a 5.9 per cent increase on previous reporting periods. Notably, the number of parents saying that they're not working 'mainly due to the cost of child care' has skyrocketed by 23 per cent, or 91,700 parents. There is now a mountain of evidence and data proving that the coalition's childcare system has failed to keep a lid on the cost of child care for families. The vast majority of families get absolutely no additional childcare subsidy support under the Morrison government's plan.

Labor's plan was put together after a continuous and serious consultation with families, with early educators and with advocacy groups. Our plan will bring down the cost of child care and keep it down, for 97 per cent of families. Our plan scraps the $10½ thousand childcare subsidy cap, which often sees women in particular losing additional money for a day's extra work beyond the two-to-three day period. It will lift the maximum childcare subsidy rate to 90 per cent and increase the childcare subsidy rates and taper them for every family earning less than $530,000. Importantly, the ACCC will design a price-regulation mechanism to shed light on costs and fees, and to drive them down and keep pressure on them for good. Under our plan the Productivity Commission will also conduct a comprehensive review of the sector with the aim of implementing a universal 90 per cent childcare subsidy for all families.

Only Labor has a plan to bring down the costs of child care for more families, and only Labor is working to ensure that we respect the role that early childhood educators play in our society as well—particularly, as I mentioned earlier, in terms of having to go to work during a pandemic. When Australians are being asked to stay at home, it's our early childhood educators who continue to go into their workplace and ensure that they're providing the support that families need so that parents can continue to work. I think it's important that we respect the role that early childhood educators play and that we reflect that in valuing the work that they do through things such as work value cases in the Fair Work Commission and ensuring that early childhood educators are paid appropriately. It's a shame that, in the past, the coalition government—the Morrison government—has campaigned against fair wages for early childhood educators. They are the key to ensuring that our kids get a decent start in life and a decent education.

1:06 pm

Photo of Anne WebsterAnne Webster (Mallee, National Party) Share this | | Hansard source

[by video link] It's a pleasure to join you virtually today to speak to the Family Assistance Legislation Amendment (Child Care Subsidy) Bill 2021. This bill builds on the success of the coalition government's childcare package that was implemented in 2018 and continues to deliver for families and children in Australia. The bill targets additional support to all CCS eligible Australian families with more than one child aged six in child care. Around 250,000 families in Australia will benefit by, on average, $2,260 per year, including 870 families in my electorate of Mallee. From July 2022, our government will increase the childcare subsidy available to families with more than one child, benefiting 250,000 families. The amendment will remove the annual cap on the childcare subsidy for families earning over $189,000 a year, benefiting around 18,000 families. This measure is so important because it removes barriers to employment for parents. Some parents have worked out that it would actually cost them more to take on an extra day or two of work because it will take them over the subsidy cap. We are removing this obstruction for thousands of people so they can take up more work for extra days and so earn more money for their family.

These changes will put more money into the hands of Australian families, especially those who need it most. Those on the lowest incomes will continue to receive the highest rate of subsidy. In fact, 60 per cent of the additional investment from these changes will go to families earning under $180,000. Half of Australian families will now receive 95 per cent subsidy for their second and subsequent children. A family in Mallee earning $110,000 a year will have the subsidy for their second child increased from 72 per cent to 95 per cent, and they will be $95 per week better off by utilising four days of child care. A family on an income of $80,000 with three children will have the subsidy increased from 82 per cent to 95 per cent for their second and third child and be $108 per week better off for four days of care. And a single parent on $65,500 with two children in four days of long day care who chooses to work a fifth day will be at least $71 a week better off. These changes will make a real difference to the lives of families all around the country and will equate to thousands of dollars of savings for families in Mallee.

These changes are yet another element of our government's commitment to sustainable and affordable childcare services across the country. Last month, I was pleased to announce the allocation of $2.6 million to support vital childcare services across Mallee to help meet the needs of local families. Fourteen childcare services across Mallee received funding through the Liberal-National government's Community Child Care Fund, which helps improve access to child care and increase workforce participation in remote, regional and disadvantaged communities. The service providers themselves were ecstatic to receive the support. The funds will provide much-needed support for services in Horsham, Donald, Mildura, St Arnaud, Nhill, Dimboola, Birchip, Murbein and Warracknabeal.

Our government is assisting childcare services that are operating in areas of limited supply to improve the viability and sustainability of their service. These investments have a flow-on effect to the local children and their families, and more broadly into the wider community, as workforce participation increases. It means that more families in Mallee can take advantage of the childcare subsidy if they choose to work, learn or volunteer. This support for families is occurring right across the country, with more than 640 childcare services around Australia sharing in more than $100 million through the program.

We know that access to child care is a significant barrier to workforce participation, particularly for women. Adequate child care is a critical element of economic prosperity. That's why I'm pleased that our government is implementing positive changes to the childcare subsidy and investing in childcare services to support their sustainability and prosperity. These investments are crucial to maintaining and improving access to child care for families in regional areas. But more needs to be done to deliver childcare services to rural and remote areas, where thin markets prevent the viability of these childcare services.

In the Wimmera Southern Mallee region, 11 of 21 townships have no centre-based long daycare available, with a further five townships having limited long daycare programs. The problem is that in 2019 a total of 536 babies were born in the same region. Invariably, some parents will miss out on child care and others will be forced to travel great distances every day, before and after work, to put their children in child care. This is true for Kendra, from Murtoa in my electorate, who is the mother of two young children. There are no childcare services in Murtoa, the closest being 40 kilometres away, in Horsham. This means that each parent, like Kendra, who needs to or wants to work locally must travel an extra two hours a day to drop off and pick up children. This causes a drain on the Murtoa community, because parents are disincentivised to take up employment opportunities in town.

Women in the Wimmera Southern Mallee region have more than double the level of postsecondary qualifications compared with men. Providing childcare support for women to participate in the workforce when their children are young would help address the extensive skilled workforce shortages and reduce loss of skills from the region. The story is much the same for townships in Loddon Shire, including Wedderburn and Inglewood. I recently met with Danny Forrest, the principal of Wedderburn P-12 college, along with Kerry Walker, Maddie Postle and Tammy Martin. This group of mothers and educators are campaigning for childcare services in their town. They told me there are currently about 40 children in need of child care. This is affecting countless families, and the group has compiled impact statements from families in Wedderburn, which they shared with me.

The question parents were asked is: how is the inability to access child care impacting you? One family responded: 'A lack of child care in Wedderburn caused my family to rely on one sole income. That was an apprentice wage. We basically lived in poverty without being able to afford healthy food. We fell way behind on bills, we couldn't afford medicines and we were so stressed out, and it got to the point where we actually had to move to Melbourne to live with family who could support us until we could get back on our feet and set up life here.'

Another mother said: 'The lack of child care in the area has meant I have been unable to find work locally. I have a five-year-old and a two-year-old and I'm currently 37 weeks pregnant. Without local child care, not only have my children not been able to socialise with other children at critical ages but it has financially impacted my family significantly, surviving on one or no income at times. Working out of town and having a child at the local kinder is not manageable. We don't have grandparents or anyone who can look after our kids and we rely on the system, which in Wedderburn has failed us.'

Another family, originally from Wedderburn, has often considered moving because of the lack of child care. They said: 'We would love to be part of the Wedderburn community again, raising our children with family, making memories with friends and contributing to the region by living and working locally. However, the inadequate childcare options and limited potential for growth for our business means that moving home is just not an option for us right now.' The problem is also contributing to a skills drain in the region. One mother said: 'Working in child care myself and having two children, I have to drive to Bendigo every day for care and work. I am very tired at the end of my day, with the extra travel I have to do five days a week. It would make our day a lot easier and allow me to spend more quality time with my children. As I am a diploma qualified childcare worker, I would love to work closer to home.' Another mother said: 'I am six months away from completing my university degree, a qualification that will be invaluable to our community. Due to having no child care, I am unable to complete this remaining six months. I'm on waiting lists for child care up to one hour away but still have not secured a place. It has greatly impacted my mental health, and I'm concerned that my child is not receiving the interaction that she needs with other young children.' I've received over 40 of these impact statements, which include many similar stories to these ones. I don't doubt that there are thousands of Australians living in rural and remote areas with similar issues.

The delivery of childcare services to these areas is a clear instance of market failure. The market cannot provide the services due to a lack of financial viability. A problem at the moment is that our current funding models are only available to operational childcare services, which need a minimum of 30 places daily to be financially viable in most cases. The shortfall relates to funding opportunities for establishing new services. Jessie Holmes, the CEO of Yarriambiack Shire Council, has done a lot of work in this space and has developed a solution. She has suggested that the childcare safety net, which has four grant streams, including the Community Child Care Fund, be tweaked to address these challenges. She wants to see the CCCF delivered on an annual basis instead of the biennial basis it currently is on. She wants a process to be established for applying for grant funding from the special circumstances stream for opening a new service, and she wants to see the maximum amount of capital support funding increased from $150,000 to $500,000 in recognition of the high cost of establishing and maintaining a new childcare facility. These are commonsense changes that would help to address the shortage of childcare services in townships across my electorate. I've spoken to the new Minister for Regionalisation, Regional Communications and Regional Education, Senator Bridget McKenzie, whom I know is a champion for rural and regional Australia. I'm pleased to have Senator McKenzie in my corner because she understands these issues better than anyone. I will continue working with the minister to ensure we achieve positive outcomes for families in my electorate.

I know that positive outcomes for these thin markets will be possible due to the coalition government's unwavering commitment to sustainable and affordable child care. Whether through funding from the Community Child Care Fund or the changes to the child care subsidy contained in this bill, our government is focused on providing childcare services to parents who need it.

1:18 pm

Photo of Joanne RyanJoanne Ryan (Lalor, Australian Labor Party) Share this | | Hansard source

I'm pleased to rise to speak on the Family Assistance Legislation Amendment (Child Care Subsidy) Bill 2021, and I'm pleased to follow the member for Mallee and commend her on raising the issues around child care in her community. I was also pleased to see the member for Curtin speaking. I'm pleased because it means that the women in the LNP, the women in this government, who were elected to represent their communities here, are feeling confident about expressing the needs of families in their communities. I join them to put some context around the childcare situation in Australia currently.

As everyone in the chamber knows, I'm the member for Lalor. That means I represent the outer western suburbs of Melbourne, specifically the local government area of Wyndham. In my electorate there are 13,380 children under five years of age attending child care. There are 5,810 above five years of age accessing out-of-school-hours care. That's a total of 19,190 children covering 14,350 families. We're a very young electorate. We're an electorate where couples are raising their children. They're attracted to our area by affordable housing. There are 157 childcare services in the electorate and they've all been confronted by a three per cent increase in fees from December 2019 to 2020.

Wyndham is home to the most children in child care and to the most families accessing child care in the country, and we're home to the most services. So those here can imagine that this is the pointy end, if you like, of my interests in serving my electorate. I'll mention the member for Mallee and the member for Curtin, because I think that context is really important. We need to understand, as the member for Curtin outlined and the member for Kingston certainly outlined, the potential economic flow-on effects of better child care in this country—of more affordable child care and more accessible child care in this country. We know that at the moment there are barriers in our childcare system that are stopping some parents from working more days. They're stopping some parents from working at all and stopping families from making decisions that would assist to set them up. I want to add to some of that context.

When I was first elected, I took a phone call from a member of my community who had just got off a train at the Werribee station. He was in the car. The train had been late and there was some congestion around the station. He was in tears because he knew that he had missed the six o'clock deadline for the pickup at child care. He was in tears, saying to me, 'Something's got to give, Jo—something's got to change.' Our families cannot continue to live under this kind of pressure.

I want to talk a little about that, because it is personal, it is social and it is economic—not just for the country but for every family accessing this service. Families in my community are leaving home and commuting, either in their cars or using public transport, often for over an hour each way to access work. If we add to that the drop-offs and pickups at childcare centres and schools for out-of-school-hours care then we have very, very long days. And that all comes together.

So I'm standing here today, talking about a piece of legislation that the government is bringing in. Let's face it, all of the women opposite and everyone in this chamber should be stopping by the member for Kingston's office to thank her, because one of the things this piece of legislation does is that it plans to abolish the annual subsidy cap. It is the member for Kingston who has driven that in this place. It is the member for Kingston who determined to take that to a Labor caucus, which has meant that the government has met that same standard—although we're disappointed that they won't be doing that for another 12 months when, potentially, they could do that today and bring some relief to families in electorates like mine and electorates across the country.

But I'll go back to that small context: we're talking about families under enormous pressure. Potentially, there are two parents working—perhaps both full-time. Often in my electorate both are working full-time. They're dropping kids off, doing the commute, doing their day's work, coming back, doing the commute and then picking kids up. They're leaving in the dark and getting home in the dark, potentially hitting the household at 6:45 in the evening to prepare the evening meal. On top of that, they're reporting—on top of that, they're constantly assessing. They're reporting: projecting their incomes then reporting on what their actuals were, stressed about whether they'll meet that cap and stressed about what the costs are—stressed by a three per cent rise in my community in childcare costs since 2019.

Add to that the pandemic. Add to that what families in my electorate went through when the government was very, very slow to recognise that there was an issue, that when we went into lockdown families weren't using childcare services because they were at home with children but were paying gap fees for a service that they weren't using. They were at risk of going over the number of days that their children could miss child care without losing their place due to illness or another reason. The government was incredibly slow to act.

In Victoria, again, they cut our childcare centres off JobKeeper. This is a government that truly needs to get a clear focus in this space, because of its importance to all the families that we all represent here. It's a government that doesn't need to look at one electorate or one region or one area; it needs to look at this system and what it is not delivering to our families.

The piece of legislation we're looking at today obviously does some good things. Its biggest flaw, however, is that it's putting off the start day until, potentially, after the next election. We welcome some of what's in this legislation, but other parts of this legislation just seem absolutely crazy. We're going through a whole reform, we're reforming a system, and we're told that it can't happen until 2022 because the government need time to fix the system, to support changes to the IT system. In fact, what they're putting in front of us is more complex than what they're changing. What they're putting in front of us is a tweak around the number of children per family. What Labor's going to take to the next election, what our policy is on the ground now, would service many, many more families and would make child care more affordable for, potentially, 90 per cent of the families in my electorate. Yet we're going to sit here, the government's going to pass this legislation and we're going to implement these changes in 2022 post the next election—and they just don't go far enough in the first place. They don't make it accessible for as many families as needed. They don't make it affordable for families that need it.

The government are doing something but they're not doing what the system requires, and they're certainly not doing what families in electorates like mine require. And families in my electorate won't be surprised, because they can put all sorts of things together in this bubble. They put their daily life and transpose it across this government's decisions. The man in the car park running late to pick up his child from child care at six o'clock can also look at the fact that this government hasn't made one significant contribution to car parks at train stations in my electorate, and he might wonder why this government made commitments to car parks at train stations in other electorates in Melbourne at the last election. He may wonder why this government is not bringing into this chamber right now legislation that will change his life—legislation that could be enacted quickly and would mean he wouldn't be worried about reaching the cap.

Remember, that person who I spoke to that night is not very likely to have children in child care anymore. He may, however, have children in out-of-school-hours care, which this government hasn't addressed in this legislation at all. It's as if children turn five and go into school, and life stops at 3.30. Many, many families in my electorate access out-of-school-hours care. Most of the school in my electorate operate out-of-school-hours care to support the parents of the children they're educating through the day, to ensure that children aren't left at the gate at 3.30, to make sure that until six o'clock in the evening—when parents finish that long commute back to my electorate—their children are supervised, cared for, watered, fed and stimulated. But this government has nothing in this legislation to support the parents who rely on out-of-school-hours care.

To me, we can come into this place and we can all put the figures up about how many parents this part of it's going to help, how many parents this part of it's going to help and what percentage it all comes back to. But, ultimately, this legislation does not go far enough in terms of creating economic opportunity, creating economic stimulation and increasing female workforce participation. This legislation does not do what Australia currently needs. It won't serve many in my community. What will serve people in my community is if, at the next election, they vote for an Albanese Labor government and deliver the member for Kingston's reform package, which will certainly deliver to the families in my electorate—every single one of them.

Photo of Rick WilsonRick Wilson (O'Connor, Liberal Party) Share this | | Hansard source

The debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour.