Jacinta Collins (Victoria, Australian Labor Party, Parliamentary Secretary for School Education and Workplace Relations) Share this | Hansard source

My understanding is that the internal departmental modelling—which is essentially what occurred—was the subject of consideration by the Senate committee when it addressed these matters. I note Senator Xenophon's concerns about what the assumptions were based on. The assumptions were based on the department's existing data on usage, income levels and payments. Essentially, that was the nature of the modelling work that was done.

In terms of dropouts or usage containment, the assumption is that it would be relatively marginal because you are talking about a cap of $7,500 per year. The main impact will be on people earning higher incomes. In fact, the figure I mentioned earlier is that only 0.9 per cent of families on less than $100,000 per year would have their level of income support affected. Were it to be affected, it will simply be affected beyond that cap of $7,500 in support per year. The likelihood that families will respond to that sort of price signal by reducing their level of care was assumed to be highly unlikely, especially the high-income recipients. Further to that, if you also model out the usual usage of child care then indeed you are looking at families using roughly in the order of two days per week and receiving a little over $2,000 per year in support, and coming nowhere near the cap in this.

These measures were designed to generate savings in a climate where the government is committed to returning the budget to surplus after dealing with the global financial crisis. Indeed, some very hard decisions needed to be made and this is one of those. Some savings needed to be generated in order to move along the national quality framework, which is also a very important priority for this government. I should highlight once again that whilst in ideal public policy terms leaving a cap for a few years, limiting the indexation for a few years is, as has been highlighted, not ideal, these measures are designed to have the most limited impact possible on childcare support and have been designed to effect that most limited impact, particularly a most limited impact on low-income earners. Further to that, if we look at what these measures have succeeded in achieving—that is, the increase to the 50 per cent childcare rebate and the significant increase in the cap level from what had previously applied—we have been able to reduce the cost of child care from 13 per cent to seven per cent of household income. So there have been significant improvements for households and these measures have been specifically designed to have the most marginal impact possible on future support and usage patterns.