Jacinta Collins (Victoria, Australian Labor Party) Share this | Hansard source

Senator Bernardi interjects, and I welcome that interjection. I was hoping that his contribution on this bill would be much more comprehensive. In fact, I would invite him to incorporate any further remarks he made but did not include yesterday, because I will address the two points he made as I continue in this speech.

As some background, the most valuable investment a community can make is in its children. Investing in children delivers long-term benefits to families, to society and to the economy. Fulfilling children’s developmental needs requires a combination of family support, strong communities and quality children’s services, and the Rudd government is committed to playing a role in strengthening this combination. Families are being stretched in modern Australia. More and more families see both parents entering the workforce in order to make ends meet. This reduces the amount of time that parents have to spend with their children and also increases families’ need for quality yet affordable childcare services. But in order to be useful, these services must be both accessible and affordable. Accessibility will only be achieved if the government commits sufficient funds for there to be enough childcare places to meet demand. Accessibility also requires that these services be provided in the right places. Affordability requires a combination of measures that will both control the cost of services and support the ability of parents to pay.

Quality child care is central to the future life opportunities for our children. International research demonstrates that investment in the early years yields not only a high rate of return measured in individual achievement but also future productivity and workforce participation. That is why child care must be accessible to families from all backgrounds. Not only is child care important for individuals; these benefits also flow on to the overall economy. Boosting the productivity and workforce participation of the next generation are crucial elements of dealing with our ageing society. And yet, despite these clear social and economic benefits, Australia’s investment in early education is only one-fifth of the OECD average, placing us at the bottom of the ladder of developed nations. This is the legacy that we have inherited from the previous government. Today’s bill is an important step in remedying current deficiencies, but, as I will get to later, it is also part of a much broader package.

As in many areas of policy, childcare services will be better if all levels of government work together. The opportunities now to promote better service delivery between all levels of government are critical and present a significant challenge, an exciting challenge, to this new government. There are many advantages to decentralising some areas of regulation to state and local authorities, particularly where highly localised knowledge is paramount. However, it is also important that there is an overall strategic vision and that there is coordination between jurisdictions. Picking up on some of Senator Allison’s points: the OECD has noted, in relation to this trade-off, that in many countries a positive consequence of decentralisation has been the integration of early education and care services at a local level, along with a greater sensitivity to local needs. However, complete devolution can widen the service gap between jurisdictions, as has been experienced in Australia. The OECD also notes that it seems important to ensure that early childhood services are part of a well-conceptualised national policy with, on the one hand, devolved powers to local authorities and, on the other hand, a national approach to goal setting, legislation and regulation, financing, staffing criteria and program standards.

The Rudd Labor government agrees with this assessment and it is—to assure Senator Allison—determined to ensure that it creates the right overall framework. This bill is an important step in moving towards that framework. The key measures of the Family Assistance Legislation Amendment (Child Care Budget and Other Measures) Bill 2008 are to implement the government’s election commitment to increase the childcare tax rebate from 30 per cent to 50 per cent. Senator Bernardi, in his comments about dealing with inflationary impact, needs to be reminded, as did Senator Allison, that this was a Howard government measure. It introduced the tax rebate as a means of improving the subsidy. This is what at this point in time we have been left with as the means, and there are problems with that means in terms of dealing with inflation that Senator Bernardi should be aware of.

The other element of this bill is to amend the childcare benefit and to enhance the civil penalties and infringement notice scheme. In addition, the bill contains a number of elements that will clarify the operation of the act and ensure consistency between provisions. I am particularly pleased to see the civil penalties and infringement notice arrangements. Compliance measures under our free-market experiment under the Howard government were one of the issues I raised privately with the government because of the concerns I had about how many childcare service operators were meeting their obligations.

Let me move to the childcare tax rebate component. This bill implements the government’s election commitment to increase the childcare tax rebate. The rebate is a subsidy that helps families with out-of-pocket costs associated with child care. There are a number of basic criteria that are quite general and allow for quite a wide coverage. From 1 July 2008 the rebate will increase from 30 per cent to 50 per cent of out-of-pocket childcare costs up to a maximum—and it is important that there is a maximum—cap of $7,500 per year. This is a key measure increasing workforce participation. Increasing the rebate is important in terms of both equity and access to the system. It is also important in terms of controlling inflation by increasing the capacity of the childcare sector. Childcare costs increased considerably faster than inflation over the term of the Howard government, as Senator Allison just raised. The cost of child care approximately doubled over the previous administration. I provide that context to Senator Bernardi’s comments about the potential for inflation. This has put immense pressure on many working families. As I said, dealing with the tax system—in part answer to Senator Allison—as the means of providing this subsidy was the choice of the Howard government.

This bill includes changes to both the rebate and the childcare benefit, as Senator Allison pointed out. Importantly, the highest levels of total subsidy, the combination of the two, will be received by working families on low incomes. This is an important measure for working families on low incomes. Access to the workforce is particularly important for these families for a large range of social policy reasons.

Moving to another element of this measure, the childcare tax rebate will be paid quarterly instead of annually. This takes us back to the issue of using the tax system to administer some of these payments and the time taken for the subsidy to reach and meet the needs of the families to which the subsidy is meant to be directed. It was incredible to see a gap of two years between families first needing help to meet their childcare costs and then eventually receiving the rebate. In terms of social policy, the notion of a measure allowing a two-year gap was amazing. I can remember that at the time it was introduced I sought some policy rationale for that measure, and the government failed to provide any logical rationale for allowing that gap. There was no rationale, other than perhaps budgetary excuses about how the budget was prepared on that occasion. From a social policy point of view, there is simply no reason to allow that type of gap in meeting the needs of families for their childcare costs. Our rearrangement of this will assist families to meet the regular costs associated with child care closer to when they arrive. Perhaps quarterly is not perfect either, but I look forward to an opportunity in the future to deal with the range of childcare and family support measures in a much more sensible and rational way.

Families being able to meet the costs of their child care and receiving a subsidy in a more regular fashion is also likely to complement the increase in the subsidy and make the childcare rebate more effective as a means of overcoming the barriers to entry to the workforce. Think about it in those terms. We know workforce participation is critical to low-income families. We know the beneficial effects of workforce participation on families with children, and yet we had a measure where those families would need to wait up to two years before they received any subsidy. It just made no sense.

Moving to the childcare benefit, I think that benefit is a subsidy provided to help families meet the costs of child care. As Senator Allison pointed out, when it was first introduced it provided a more meaningful level of support, but with the escalation of costs this was eventually eroded. Senator Allison is correct in saying that the bill will remove the minimum rate for the childcare benefit and that other measures will ensure that some level of support for higher income families remains. But this measure is very important for another reason, which I raised several years ago in relation to child care. It was illogical that families such as mine received a minuscule childcare benefit in relation to their use of child care. The administration of those payments would have cost more than the amount I received. I sought on many occasions to get an explanation from the department as to what the overall administration costs were of paying me a minuscule childcare benefit. I am pleased not only to see that this has been rationalised and removed but also to note that higher income families under the new arrangements for the tax rebate will actually still continue to receive some support, but in a much more administratively sensible fashion. I look forward to a range of areas where we deliver family and community childcare support and administer it in a much more effective way. This has been one of the classic examples that I have explored over the years.

To remind the Senate, in the early days of family assistance, families receiving low levels of family assistance would argue: ‘We’re happy for you to means-test it. Take it away; direct it more sensibly. Me receiving $10 a fortnight means very little to our family life and we would like to see those funds better directed.’ That was my introduction into social policy and financial support for families. Senator Bernardi is suggesting that Australian families looked at the budget and did not see the fine detail of some of our means-testing arrangements and will regret that they have lost some minor access to things like the childcare benefit. Senator Bernardi needs to understand that Australian families do want to see a strong, effective and viable social security system. They are not solely interested in the payments that they themselves receive; they want to see income transfer arrangements that support all families and ensure we do not have other social problems resulting from families not receiving adequate support.

There is very strong support in Australia for effective targeting of welfare payments. This is one of the things about Australian society which makes me incredibly proud. It is one thing in comparison between Australia and many other countries in the world that I can say has survived through much of the cultural changes that have occurred in recent years. Australians want to maintain a strong welfare support system for our families. They are not concerned to miss out on minor things such as the childcare benefit. Indeed, when I first entered this place, I asked a question about the application of the maternity allowance and I was pregnant with my now 12-year-old son, James. I knew I would not receive that benefit; I was proud we were introducing it. I did not myself want to receive that benefit but it was necessary and critical for Australian families, and indeed our obligations to ILO standards, that we provide some measure of support for women during their pregnancy.

Let me move to the compliance measures. As I said, there are a range of aspects of the operation of our childcare system that were part of a Howard government radical free market experiment. The compliance of childcare operators became a serious concern some years back, and we do need to strengthen this area further. We need to make sure that what we are funding is well delivered at the grassroots, and so I support those aspects as well.

I would like to briefly touch on the broader reform context. These changes are part of a $2.4 billion investment over the next five years on integrated early childhood initiatives that will provide high-quality services for young children and help build a productive, modern economy for Australia’s future. The measures are supported by the government’s commitment to develop rigorous new quality standards and an A to E quality rating system to raise the quality of childcare services, to drive continuous improvement in the sector and to support the establishment of up to 260 additional early learning and childcare centres to increase the supply of quality child care.

In response to Senator Allison’s concerns about a potential inflationary impact, this is another critical area. One of the reasons costs have been able to escalate is the lack of supply of places, and Labor is committed to addressing this issue. Poor planning has been another problem for this sector. I look forward to us addressing some of those issues. These measures also complement the new investment in early childhood education. The Rudd Labor government has committed $533.5 million over five years to provide all children, including Indigenous children living in remote communities, with access to affordable quality early learning systems.