Lyn Allison (Victoria, Australian Democrats) Share this | Link to this | Hansard source

The Democrats support this omnibus bill which gives effect to changes to the childcare tax rebate and the childcare benefit, along with a number of other changes. The Family Assistance Legislation Amendment (Child Care Budget and Other Measures) Bill 2008 implements the government’s election commitment to increase the rate of childcare tax rebate from 30 per cent to 50 per cent of out-of-pocket costs and to increase the annual limit per child from $4,354 to $7,500 per income year. The bill also provides for the childcare tax rebate to be paid quarterly instead of annually at the end of the tax year, to help families meet the regular costs of child care closer to when they arise.

Accessible and affordable child care is one of the critical issues for working families and one of the biggest barriers to mothers re-entering the workforce—sometimes fathers, but mostly mothers. There have been many warnings that the lack of affordable child care is hampering our economy, stalling workforce participation and exacerbating Australia’s skills shortage. Almost a quarter of a million women are not working today because they cannot get child care. The majority of those have preschool children, and many have children under two years of age. But child care is not just about enabling parents to participate in the workforce; it should also have a very important role in early childhood development. High-quality child care and early childhood education are crucial to improving educational achievement and curbing antisocial behaviour and child poverty. Early childhood development should be at the centre of childcare debates. Early childhood education lays the foundation for effective learning and improves social, cognitive and emotional development. Access, affordability and quality are all very important in child care.

The measures in this bill deal primarily with affordability, but this is not the only issue, as I have said. I will come to those other issues shortly. Many families struggle to afford child care, and its cost often outweighs the net financial benefit to families for parents to work. The childcare benefit made child care more affordable temporarily. However, the gains in the affordability have been eroded by fee increases far in excess of increases in the childcare benefit, which are linked to the CPI. We have heard that in the past five years childcare costs have increased by 65 per cent compared with an increase of only 17 per cent in disposable income. Childcare fees increased by 12.9 per cent in 2006 alone. I might point out at this stage that I am not arguing that childcare fees should be cheaper, because properly trained staff and properly paid staff cost money.

When the previous government introduced the childcare tax rebate, it was welcomed as a significant injection of additional funding for the sector and also as a way of assisting with the out-of-pocket expense of child care. But there were significant concerns about the rebate, particularly that much of the extra support available from the tax rebate was soaked up by higher fees. There were also concerns that higher income earners would benefit most. Not surprisingly, these same concerns have been raised again with the current government’s undertaking to increase the rebate to 50 per cent. It is true that the rebate has high annual maximum rebate levels that will probably only benefit higher income families using full-time care. Few families can afford to pay the thousands of dollars in out-of-pocket costs that would entitle them to the maximum rebate of $7,500—and, as in 2004, we do not really know what impact the rebate will have on fees.

Childcare costs, as measured by the childcare component of the CPI, have grown well above inflation since right back in 2003—before the childcare tax rebate was announced. Over the last four years, increases have been between 12 per cent and 13 per cent per year. We do not know either to what degree increases in childcare fees are being driven by factors such as wages or demand for places versus childcare operators taking advantage of families’ greater capacity to pay due to the increased government subsidy provided by the rebate. In the March quarter this year, childcare costs rose a further 4.5 per cent. It may be that that was in anticipation of this increased rebate or it may simply be the increasing demand for places and the increasing costs of operators.

The measures in this bill deal primarily with affordability but neglect those other elements, which I will come back to them. We have heard reports that some operators are going to put up their fees by as much as 10 per cent, and I guess we will have to wait and see what happens. What we do know is that there is still nothing in this payment mechanism to prevent the extra funding being very quickly absorbed into higher fees or higher profits. Certainly the example of other open-ended subsidies such as the 30 per cent private health insurance rebate suggests that they certainly do not put any downward pressure on costs. This is why the Democrats, along with others, have been calling for a schedule of standard childcare fees similar to that for Medicare healthcare costs.

We also need governments to be prepared to fund new childcare centres where they are needed. I notice that in the budget there were some new childcare centres proposed to be built—co-located, I think, with schools and the like. We welcome that, but we need to make sure that they are placed in areas where there are already serious shortages. In my part of the world, Port Melbourne, and in inner Melbourne generally, there is a shortage of places because of the value of residential land. I urge the government to take that into account. But they should also assist in providing land to build new centres or expand existing services, perhaps in collaboration with state governments. Perhaps the federal government could provide the capital for these new centres to be built.

But it is not just about making more places available. We need a funding and quality control system that delivers the environment which all the experts tell us is needed to achieve the best outcomes for young children. Thirty years of child development research says that the key factors in quality child care are the ratio of staff to children, the number of children in the group in which they are cared for and the qualifications of the staff caring for the children. So we need a system that provides child-staff ratios of at least one adult to three children for infants, at least one adult to four children for one- to two-year-olds and at least one adult to eight children for three- to five-year-olds. We need a clear strategy that will deliver enough properly trained and accredited childcare staff. Childcare professionals are leaving the industry at a time when we need to retain all of those that we have and to recruit and train more staff.

One big problem that I have raised many times in this place is the fact that many childcare workers have no formal qualifications at all. The Democrats argue that we must move to a system where all childcare workers have at least two-year equivalent post-secondary qualifications in early childhood development. We need to double the proportion of childcare workers required to have early learning specialist degrees. This is a very important area of education and it is ludicrous that we require teachers to be trained but not those who deal with young children. We should expect no less for children receiving education and care prior to their entering school. We must also improve the working conditions for those who work in this field. The people who work in child care are amongst the lowest paid in the country. There is also a very clear difference between the salaries of those working in the private sector and those in the community sector, and there is a lack of career opportunities. Without fair pay, quality working conditions and long-term career options, people will not choose to work or stay in this sector. So we must make sure that as well as a properly trained workforce there are national standards for age-appropriate development programs and for maximum group sizes. The Rudd government has promised a national early years workforce strategy, and we look forward to seeing that. They have promised to remove TAFE fees for childcare diplomas and to create more early childhood university places. They are very welcome moves, but they are still just the tip of the iceberg.

Time and time again evidence has shown that parents are saying they cannot afford childcare costs. Raising the childcare rebate from 30 to 50 per cent will certainly help in the short term, as will allowing the rebate to be paid quarterly instead of annually. It took the previous government three years to realise that having families receive the 30 per cent rebate two years after they had to fund increasing childcare costs was a luxury that many parents simply could not afford. The Democrats and many others argued when the rebate was first announced that making people wait would not help most families. A payment four times a year is a distinct improvement on the previous situation, but it will still be difficult for some families to pay their weekly bills.

This legislation also makes some changes to the childcare benefit. Much has been made by the opposition about the removal of the minimum rate of the childcare benefit, which means that some families will no longer receive the benefit payment at all. It has to be remembered that the minimum rate of the benefit was put in place so that families would get some assistance with child care, regardless of their income. We now have the rebate, which is not means tested, so there is still a means-test-free method of providing assistance. Additionally, childcare benefit and childcare tax rebate work together. Families who receive lower levels of the benefit have higher out-of-pocket costs for child care and, therefore, get more benefit from the rebate.

As I have said, the Democrats will be supporting this bill because it will bring relief, however temporary, to families. We need a comprehensive, long-term solution to the needs of families and children. Tax reform is not the way to fix child care, either to contain costs or to address problems of quality. We should not continue to let the market dictate allocation of places, costs and quality.

In 2006, the OECD published a comprehensive survey of early childhood education and child care. It expressed a preference for direct funding of childcare services as opposed to the path that we have gone down in recent years in Australia. According to the OECD, the conclusion reached is that direct funding brings, for the moment at least, more effective control, advantages of scale, more even national quality, more effective training for educators and a higher degree of equity, access and participation than parent subsidy models. Increasing the Commonwealth contribution is not a bad thing, but we would urge the government to take heed of that OECD report and, in the not too distant future, consider it and consider directly funding child care instead of the system that we have. I remind the government that the return from investing in early childhood development in terms of childrens’ future development and their integration into society is invaluable.

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

It gives me enormous satisfaction to speak to this bill as essentially my second first speech. The Family Assistance Legislation Amendment (Child Care Budget and Other Measures) Bill 2008 represents a number of measures and sits within a broader reform context in areas of social policy about which I am very passionate. Aside from the Rudd government’s workplace relations reforms, the Working Families Support Package and our early childhood initiatives also directly redress years of poorly framed, and often purely ideological, policy and a period of neglect under the Howard government. The childcare sector, like the dental services area that was discussed in the disallowance motion earlier, was one of the early victims of the Howard government’s ‘reform’ when capital funding was removed from the sector. We also have their long-touted, but never eventuated, early childhood agenda. As Senator Allison suggested, we still lack the agenda that was paraded by the Howard government as being developed for many years.

As Senator Allison said, childcare costs have escalated. We had unprecedented levels of unmet demand which were allowed to develop under the Howard government and deliberately maintained. Like employment services and some areas of education delivery, the childcare sector became another radical free-market experiment under the Howard government. Here now we have one element of genuine and constructive reform. I am glad that the opposition’s economic vandalism does not extend to this particular bill. We do have a strong mandate for this bill, and much of that mandate has been developed by the vandalism that occurred under the Howard government to this sector.

Cory Bernardi (SA, Liberal Party, Shadow Parliamentary Secretary for Families and Community Services) Share this | Link to this | Hansard source

Why didn’t you disclose it all before the election then?

Jacinta Collins (Victoria, Australian Labor Party) Share this | Link to 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.

Steve Hutchins (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Order! Senator Collins, your time has expired.

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

I seek leave to incorporate the remainder of my comments.

Leave granted.

The remainder of the speech read as follows—

These programs will be delivered by a university qualified teacher, for 15 hours a week, 40 weeks a year in the year before formal schooling.

This will be delivered in a range of settings, including long day care, to ensure it meets the needs of working families.

They also sit within Labor’s $55b Working Families Support Package, incorporating: much needed tax relief aimed at working families; the education tax refund; measures aimed at the housing affordability crisis; a fairer Medicare levy surcharge; and the Teen dental plan.

Today’s bill is an important step in making child care in Australia both accessible and affordable.

This is an important area of policy that represents an intersection of the government’s social and economic policy agendas.

Finally I want to make some comments acknowledging those who have enabled me to continue promoting my passion for social justice in this place.

Without the support of my family, extended family and broader family in the labour movement this would not be possible.

The labour movement remains another passion and I thank many, including state and federal colleagues, retired Senator Robert Ray, John Lenders, Jenny Lindell, Fiona Richardson but, also, in particular, Michael Donovan and Joe de Bruyn for their ongoing support and encouragement.

My family has grown in my absence but their support, willingly provided to me, can not be underestimated nor left unacknowledged.

My doctor suggested, half seriously, that I use my sabbatical to have another child but instead I became a grand-mother.

I very much value the life experience and balance provided by a full and active family life. (A detailed knowledge, from experience, of many areas of public policy has not hurt either.)

To my parents, Gavin and Shirley; Daryl, James and Madison; Ben, Leeamber and now Charlotte, thankyou for your ongoing faith and support as I re-enter public life once more.

Ruth Webber (WA, Australian Labor Party) Share this | Link to this | Hansard source

I seek leave to incorporate speeches by Senators Carol Brown and Trish Crossin.

Leave granted.

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

The incorporated speech read as follows—

I rise to speak on the Family Assistance Legislation Amendment (Child Care Budget and Other Measures) Bill 2008

This bill delivers on the Rudd Labor Government’s election commitment to help working families meet the costs of childcare by increasing the Childcare Tax Rebate from 30 per cent to 50 per cent of out-of-pocket childcare costs- up to $7,500 a year. The bill will also see the rebate paid quarterly rather than annually.

This initiative will to help take pressure off the household budget and childcare expenses.

The benefits to be had by working families do not stop there. This measure is part of a broader $2.4 billion investment over the next 5 years by the Rudd Labor Government in integrated early childhood initiatives, which will not only provide high-quality services for our young, but also help fight inflation and build a strong economy for our nation’s future.

Indeed, this measure complements by a number of other initiatives put in place by the Rudd Labor Government, to take care of our children and ensure that working families have access to quality, affordable childcare.

In this area, the Government has also committed to:

• Developing rigorous new quality standards and a A to E rating system to foster constant improvement in the quality of services available in the childcare sector;
• Supporting the establishment of up to 260 additional early learning and childcare centres around the country; and
• It has also committed to invest $533.5 million over the next five years to improve access to early childhood education, the provision of which is undoubtedly intrinsically linked to the provision of high quality childcare.

The measures contained in this bill reflect an acknowledgement by the Rudd Labor Government of the current strain being put on families across the country when it comes to juggling the demands of work and home.

It reflects an acknowledgement of the fact that many working families, childcare provides the important connecting link between the work- home divide.

In this sense, the measures contained in this bill, not only directly benefit, childcare users around the country, they also play an important part in facilitating greater workforce participation-and therefore also helping to tackle inflation head on.

The result is a double dividend for working families across Australia.

However, first and foremost, lifting the childcare tax rebate from 30 to 50 per cent as this bill does will directly benefit more than 700,000 families across Australia who access childcare services each year.

In my home state of Tasmania, the measures contained in this bill will directly benefit the some 20 thousand children and their families who access child care services each year.

For the average Australian family, with one child this measure will result in an additional $500 to $2,500 being available in the family budget.

When viewed in the context of the other pressures currently being placed on the household budget by growing housing, petrol and grocery costs- the extra money that families will receive as a result of lifting the childcare tax rebate to 50 per cent will be most welcome by Australian families.

The measure, which, as I said, will result in more money being returned to the back pocket of hard working Australian families, is in stark contrast to, the situation which occurred under the previous Howard Government.

During the term of the previous Howard Government childcare costs almost doubled. In fact, under the Howard Governments watch, in their last five years in Government, the cost of child care rose, on average, 12 per cent per year.

On top of this, the former Government made a further mockery of working families when it forced them to wait up to two years to receive the childcare tax rebate, when it was first introduced,

This was the actions of a Government that after eleven long years in power had gone stale and lost touch of the financial realities being faced by average working families across Australia.

When taking office in November last year, the Rudd Labor Government pledged to assist the family budget by introducing measures aimed at putting money back into the pockets of Australian families.

As I stated earlier, this bill, delivers on that commitment, by lifting the childcare tax rebate from 30 to 50 per cent and giving more money back to families.

Indeed when combined with the other measures such as:

• the $46.7 million in tax cuts for low to middle income earners,
• the introduction of the education tax refund, and;
• the Increase to the Medicare Levy Threshold;
• contained in the Rudd Labor Government’s $55 billion Working Families Support Package the measures contained in this bill reflect a genuine commitment by this Government to assist those families who are doing it tough.

As the Minister for Workplace Relations, Minister for Workplace Relations, Ms Gillard, pointed out in her second reading speech on this bill, the changes to the childcare tax rebate also creates significant flow on benefits in terms of stimulating greater workforce participation.

By easing the pressure placed on the family budget by childcare costs, the increased rebate makes the option of returning easier and more affordable. The significance of this should not be down played, as a survey conducted by the ABS found that concerns regarding the accessibility and affordability of childcare were one of the primary factors contributing to the decision of around 85,000 secondary earners to stay out of the workforce.

And from all accounts, this is the predicament that many families have found themselves in, when trying to manage the family budget and weighing up whether or not it is worthwhile for both parents to return to the workforce.

For women in particular the pressures associated with trying to juggle the costs associated with child care with those associated with rising interest rates, petrol and grocery prices, have left many in a situation where they simply could not afford to return to the workplace.

However, by increasing the childcare rebate and giving families more money in their pockets, the Rudd Labor Government has effectively removed some of the disincentive that previously prevented many secondary earners from returning to work.

The rebate not only gives working families already utilising childcare services more money in their back pocket, it encourages families, which previously might not have been able afford the cost of childcare, to consider returning to the workforce for the first time.

The rebate not only provides more freedom in the family budget, it also effectively provides more freedom of choice when it comes to option of returning to work after having a child.

These are the tough real life decisions that many families and single parents face, after having a child, and the rebate is one of a number of measures which the Rudd Labor Government intends to put in place to make this process, where possible, a little easier.

By facilitating greater workforce participation, the rebate also contributes to helping achieve one of its other primary goals- which is to fight inflation.

When the Rudd Labor Government took office last November, it, it inherited an economy crippled by inflation at its highest levels in 16 years. The Government automatically rolled up its sleeves and made fighting inflation its number one priority.

In light of this, the Government announced a five point plan to tackle inflation- of which lifting workforce participation- was one of the key ingredients.

The proposed increase to the childcare tax rebate, adds to a suite of other measures aimed squarely at achieving this goal.

The increase in the childcare tax rebate is not only good for families, its good for workforce participation and its good for the long term health of the economy. It’s a case of win, win, win for working families.

As a mother of two young children, I know just how quickly the cost of childcare can eat up a significant proportion of the family budget.

When elected, the Rudd Labor Government pledged to take action to ease the pressure on the family budget, and with this measure, it has made good on this commitment.

More than 700,000 families, who use child care services each year, will be given more money in their back pocket. Indeed for average family with one child will benefit from an additional $500 to $2,500 a year to put toward the family budget.

Through such measures the Rudd Labor Government has acknowledged the difficulties faced by working families when it comes to balancing the work-home divide.

The rebate reflects a commitment by the Government not only to help working families get on top of the family budget pressures, but also to foster greater choice when it comes to workforce participation, for second income earners.

This bill delivers on just one of the Rudd Labor Governments election commitments designed to assist working families and has my full support.

The passing of this bill, will see families childcare tax rebate increase from 30 per cent to 50 per cent as of 1 July 2008.

I commend the bill to the Chamber.

Trish Crossin (NT, Australian Labor Party) Share this | Link to this | Hansard source

The incorporated speech read as follows—

I rise today in support of the Family Assistance Legislation Amendment (Child Care Budget and Other Measures) Bill 2008.

Whilst campaigning prior to the 2004 election, child care availability and affordability was just one of many issues consistently cropping up across the Territory. Child care has become an essential service for working families, where a stay- at-home parent may not be an option for many families, as the cost of living is impacting family budgets.

Unfortunately, with the increasing cost of child care as well, it has become something of a catch-22—struggle with one working parent and no child care fees, or struggle with two working parents and increasing child care costs. This bill seeks to rectify this problem that many families are facing by making child care more affordable for working families.

More than 700,000 families use child care each year, making it an integral service for Australian families. The past five years have seen child care costs soar, rising faster than the cost of other goods and services. In the 12 months to June 2007, child care costs rose by 12.8 per cent, making it the fifth year in a row of double-digit increases.

It is not hard to see why concerns about the quality, accessibility and affordability of child care were important factors in the decisions of 85,000 secondary earners to stay out of the workforce, as found by an ABS survey.

Last year Federal Labor developed an Affordable Child Care Plan in response to Australian families crying out for help in the face of rising child care costs. This is a $1.6 billion investment as part of an overall $2.4 billion package over the next five years, investing in early childhood initiatives that will provide high-quality services for young children and to help build a productive, modern economy for Australia’s future. Federal

Labor went to the 2007 election with this commitment, and we are now making good on our promise.

Part of this initiative was to increase the child care tax rebate from 30 per cent to 50 per cent of out-of-pocket child care costs, up to $7,500 per child per year. The bill delivers on this initiative. This rebate has been substantially increased from $4354, giving families more money to put back in the family budget.

The rebate will also be paid quarterly, rather than annually, which allows parents to meet the costs of child care as they occur. The great news is, parents will receive the first quarterly payment this October, easing the stress on the household budget and hopefully making that weekly, fortnightly and monthly juggle easier.

The quarterly payment of the rebate is in stark contrast to the previous governments’ child care policy. When the child care tax rebate was introduced after the 2004 election, parents had to wait nearly two years to receive the rebate —long after the ever increasing child care costs had been incurred!

It was only after much community pressure did the previous government see the absolute stupidity in this and make the rebate accessible a year after costs. Federal Labor is making the rebate even more accessible, understanding that parents need the rebate to meet the costs as they arise, not a year later, by paying back the rebate quarterly.

The bill also sets out provisions to ensure quality child care for young Australians and to protect families. It will extend the Civil Penalties and Infringement Notice Scheme to provide a broader range of options for enforcing compliance of child care service providers with their obligations under the Family Assistance Act. These obligations include

• not passing on appropriate fee reductions to families;
• failure to keep appropriate records;
• failure to provide families with appropriate financial statements
• failure to provide reports on child care usage and child care benefit entitlements for individuals attending the centre
• failure to act on notices from the secretary.

Currently, the only options available when a centre does not comply with their obligations, and that is either criminal prosecution or the suspension or cancellation of the Child Care Benefit.

These options directly impact on the fees that families pay. The new scheme allows civil action to be taken without directly impacting on families, which will increase the efficiency and effectiveness of the child care compliance regime. This means centres will be compelled to meet their obligations without resorting to criminal proceedings that may result in the centre receiving a criminal record.

These changes will only impact on centres that don’t fulfil their legal requirements, sending a strong message of deterrence and discouraging child care centres from starting to or continuing non-compliant behaviour.

In line with Federal Labor’s commitment to responsible economic management by reducing the value of payments for those who are able to afford it, there will no longer be a minimum rate of the child care benefit for approved care from July this year. This proposal will only affect high-income families. In the current system, a family’s income determines how much child care benefit they receive, with a minimum rate applied to the highest incomes regardless.

The bill proposes that instead of the child care benefit reducing to a minimum rate, it will continue to reduce until the family’s rate is zero. The cut off mark for the child care benefit will depend on the number of children using approved care, and will effectively mean that high-income families will no longer receive the child care benefit.

I However, that being said, any loss families will have by this is more than compensated through the increase in the child care tax rebate. It must be made clear that all families currently receiving the child care benefit and the child care tax rebate will continue to be eligible for the child care tax rebate, even if they are no longer eligible for the child care benefit due to their high income. As long as families meet the basic eligibility criteria for the child care benefit that are not income related, they will be eligible for the child care tax rebate.

At the moment, with the increased cost of child care fees, parents are considering whether it is worth having both parents in the workforce, if one parent’s wages are going solely to pay the child care fees. The child care tax rebate is aimed at working families and the parents who are seeking to get back into the workplace.

The Federal Labor Government sees the lifting of workforce participation as a crucial part of their five point plan to tackle inflation. By reducing the out-of-pocket expenses felt by families, parents will have the opportunity to get back into the workforce or even take on extra training. It is through increased workforce participation that Australia’s economy is able to build extra capacity, which will help ease inflationary pressures and drive down interest rates.

All these measures put forward in this bill are part of Federal Labor’s $533.5 million investment over five years to give all children, including Indigenous children living in remote communities, access to an affordable quality earl learning program, delivered by a university qualified teacher, for 15 hours a week, for 40 weeks a year, in the year before formal schooling. This is set to be delivered in an ambitious quality framework that includes long day care, to make sure it meets the needs of working families and to give our kids the best possible start in life. It will also include integrated care and learning, universal preschool for all pre-primary, a rigorous A to E set of quality standards and a highly trained workforce.

This Government is serious about child care. 260 child care centres will be built around the country in areas of need to address the child care shortage that is plaguing our families, a shortage we are well aware exists, unlike the opposition who last year vehemently denied there was any crisis.

The former Member for Longman, who was also then Minister for Families and Community Services, even went so far as to state in April 2007, that “There is no crisis. I’ve been saying long and hard there are no crises.” This was said much to the incredulity of thousands of families who were searching in vain for a child care vacancy for their children. Of course, the former Member for Longman soon found himself in his own crisis, when his electorate gave him their final verdict on his performance as a local representative on November 24th last year.

Federal Labor is listening to Australian families. We are making a significant contribution in the 2008-09 Budget to help working families meet the costs of child care, and I believe this bill does that. I am happy to commend this bill.

John Faulkner (NSW, Australian Labor Party, Cabinet Secretary) Share this | Link to this | Hansard source

in reply—I rise to close the debate on this very important Family Assistance Legislation Amendment (Child Care Budget and Other Measures) Bill 2008. Let me commence my closing remarks by congratulating Senator Collins on her second first speech in the chamber. It is a pleasure, of course, to have her back and a pleasure to be here in the chamber when she delivered her second first speech.

This bill is an important step in the Australian government’s comprehensive plan to deliver affordable, high-quality and accessible early learning and child care. This plan is part of the Australian government’s commitment to create an education revolution and improve social inclusion. Our policies are aimed at creating a more prosperous and equitable society. This is a long-term goal of course that cannot be achieved overnight.

Australia faces significant challenges to improve the productivity and participation of our working population. To this end, the government is making an investment in child care that will make it easier for parents to return to work after the birth of a child. The childcare tax rebate assists not only those parents who were returning directly to work but also those who are participating in study or training that will help them return to work with a higher skill level. The new childcare measures will assist people who want to work to get back into the workforce. They will boost the economy and put money back in the pockets of working families. This government’s package of childcare measures is an innovative and responsible investment in child care.

In fact, this bill will increase the childcare tax rebate from 30 per cent to 50 per cent of out-of-pocket costs, increasing the maximum payment from $4,354 to $7,505 per child per year. The payment will be made quarterly instead of annually. It will relieve families of financial pressure by providing them with assistance with their childcare costs closer to the time of the childcare expenses. The removal of the minimum rate of childcare benefit will ensure that payments are fair and equitable across different income levels. This change will ensure that assistance is provided where it is most needed. It is a part of the Rudd Labor government’s commitment to responsible economic management.

A number of other amendments are included in this bill that will improve the effectiveness of the current compliance framework and enhance the operation of the childcare management system. We are starting by making child care more accessible for working families. Young people represent the nation’s future prosperity and international competitiveness. It is vital that these measures be put in place as the first stepping stones on the pathway to securing the prosperity that all Australians deserve. I would say in conclusion that I appreciate the contribution of all senators who spoke in this debate. I commend the Family Assistance Legislation Amendment (Child Care Budget and Other Measures) Bill 2008 to the Senate.

Question agreed to.

Bill read a second time.