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Wednesday, 1 June 2011
Page: 5503


Ms LEY (Farrer) (11:32): I rise today to speak on the Family Assistance Legislation Amendment (Child Care Financial Viability) Bill 2011. The coalition will be moving a second reading amendment during the second reading debate. We will also be moving an amendment during the consideration in detail phase. This bill reiterates the government's love affair with red tape. The coalition does not oppose sensible regulations. However, when those regulations do not clearly define their mandate and seek to do little more than impose more and more onerous requirements on business, we do need to raise our voices.

The childcare sector is already more than overwhelmed with administrative requirements. At every childcare centre I visit I hear the common message that it is the administrative requirements which are so extensive that take away from the primary purpose of a childcare centre, which is caring for children. I have painted the picture before of the toddler on one hip and the clipboard on the other and the boxes being ticked. I know that is not what this bill is about. I understand that this bill is about something quite separate and I will come to that. However, I do want to make the point that we are dealing with a sector that is completely overwhelmed with red tape, whether it be in the community services area or the small business area. We know that because we have heard the message from small businesses that talk to us on this side of the House anyway about the amount of time they have to spend doing book work to satisfy external stakeholders, including government. Remember that all of the time spent on this sort of carry-on is time away from your principal activity, and in the case of a childcare centre that is the care of children.

I have heard from one centre recently that does not care for nought to two year olds but is still required to have cot death information within their sleeping policy. That is one example. Childcare workers are overwhelmed, and that is not because of ratios between them and the number of children, it is not because of busy little toddlers, it is not because bottoms need wiping and faces need cleaning and food needs preparing—it is not because of any of those things; it is because of the paperwork.

The amendment that we are moving highlights this government's lack of understanding of business, constantly trying to make life harder for business and imposing more and more red tape. It is ultimately another broken promise. The Rudd Labor government made an election commitment to ease the red tape burden on business by a one in, one out requirement for regulations. Unfortunately, this promise has been shelved and now the government marches forward madly intent on imposing regulations left, right and centre.

Ultimately, the six or so businesses that will be affected by this legislation have their own measures in place to ensure their financial viability. On that point I will come to the substance of the bill. It seeks to amend the A New Tax System (Family Assistance) (Administration) Act to provide for the assessment and ongoing monitoring of the financial viability of large long day care centre operators of approved childcare centres. By way of background, in late 2008 the largest provider of childcare services in Australia, ABC Learning, went into voluntary administration. At that time they had approximately 1,000 childcare centres nationally. It is well known that the rapid collapse of this provider saw the childcare sector thrown into turmoil. A government bailout of $58 million took a while coming. It was needed to keep these centres open and provide certainty for Australian families and the childcare workers.

During the period of receivership a decision was made to close 55 of the unviable centres. A further 262 unviable centres were transferred into the ABC2 group and sold through a process managed by a court appointed receiver at the request of the Commonwealth. Up to an additional $34 million was allocated in total to keep these centres operating until the final completion of that process in August 2009. A further 26 of these centres closed before being sold. The remaining 720 centres continued to operate until sold by the receiver in 2009 and 2010 with GoodStart being the preferred purchaser for the majority of these centres. That is all a matter of history and a matter of fact. I do not wish to reflect on the reasons why ABC Learning went the way it did, except to note that it was during the global financial crisis. There may have been factors related to the strategic direction of the company; there may not have been. But I do resist the implication in this bill that there is, because of that instance, something wrong with the private provider model of child care in this country, because we know that the community sector and the private sector each have a role to play in the provision of child care and that there is no one type of centre that is better than the others. I certainly know that they are all struggling with increasing costs, red tape and the requirements of the national quality framework that are being imposed on them, whether they be community or private providers. From that point of view, they have been put under the pump by this government. There is no one model to be preferred and I do resist that implication in this bill. There is a subtext running through it that, if you are a large private provider, maybe something could happen to you and you could go broke as a result.

I want to reflect on the regulation impact statement that was produced as part of the explanatory memorandum for this bill and the approach that was taken by the department and the government in looking at a framework for assessing the viability of large long day care providers. As I said, this was part of the national quality framework. In May 2010 the government announced that it would invest $273 million to support the introduction of that National Quality Framework for Early Childhood Education and Care. I have had much to say about that in other forums and will continue to do so, but for the purposes of this bill $1.9 million of the announced funding was to support new regulatory measures to help achieve ongoing stability in the childcare industry following the ABC Learning crisis. So this bill has its particular genesis in the ABC Learning crisis, and that is the slight problem that I have: this implication that there was a problem in the private provision of child care by large operators. It is large operators that are targeted by this bill. You would need, according to the explanatory memorandum, to have 25 sites across Australia in order to come under the ambit of this bill. Currently I understand there are about six large providers who would do so.

According to the explanatory memo­randum:

This Regulation Impact Statement (RIS) provides an assessment and information from the consultation process conducted with the child care sector on the two regulatory measures below:

Developing enhanced measures that required large child care providers to provide financial information in order to assess and monitor their financial viability on an ongoing basis; and

Creating a new legislative power to enable an independent audit (audit power) of a child care provider to be commissioned where there are concerns about its financial viability and the failure of the provider could have a material impact on the market or a section of the market.

It sounds quite reasonable. There is the possibility of something happening in the sector and of course parents need to be reassured. I agree with that. I agree that when a childcare centre closes it is enormously disruptive to any family. So the principle is sort of okay, but when we look a little bit deeper into the substance of the bill and how it would actually play out in practice, we in the coalition see problems. I alluded to the problem relating to the amendments that I will move at this stage, which is simply the size of the regulatory burden that would be imposed. In providing this information to the Department of Education, Employment and Workplace Relations, centres might have to take even more time out from running their small business or, in the case of a voluntary board, take more time out of their lives in a voluntary capacity to come up with information that might be available on the public record anyway, in which case it is not so much of a problem, might not be necessary and might not be any of the department's business. In other words, I do not agree with the department, because a centre or operator receives childcare benefit, going on a fishing expedition and scooping up information through a provision in this bill that says, 'Any other information required by the secretary can be sought.' We know that could mean a multitude of things. It could mean that centres are required to appoint outside consultants or financial analysts or wheel their accountant in for another whole round of paperwork during the year just to satisfy the bureaucrats of something. That is essentially where the problem lies.

Coming back to the rationale, which is that large childcare providers might go belly up and we need to know about it in advance, I introduce the suggestion that the centres that are most likely to encounter problems are small ones. The going broke, for want of a better word, of a small centre in a small town with very few alternative options for parents is just as dramatic for families. If the department and the government are satisfied that measures are in place for small centres, and I am satisfied that they are, that would be something that could not be controlled by government. After all, we cannot control everything that happens, but what we can do we have done. If that is okay for small centres in rural areas, if that is okay for operators with less than 25 sites across Australia, why is there the suggestion that it is not okay for operators with 25 sites or more. Would you not expect that the requirements of the Corporations Act, the requirements for centres that are owned by large operators, would demand that they provide this information, that they provide it regularly, that they have it on hand and that they have in fact climbed over those regulatory and business hurdles in the first place?

The financial viability framework costs $1.9 million. Some in the government may say that it is only $1.9 million, but it is going to employ more bureaucrats in the department. It is going to employ more teams of assessors and the problem is that, if those assessors decide that there is a problem with some of the information they receive, or more likely that there might be a problem, the first issue is whether they have the expertise to determine that themselves. I noticed in a report that was commissioned as part of the homework for this particular piece of legislation there was a suggestion that the department actually calculate the financial ratios. I do not think the department should be calculating financial ratios. I suspect they would hive that activity off to consultants. But even more alarmingly, they could send that back to the childcare provider and say: 'You do it. We need this information. We need this set of ratios. We need to know all these things and you pay for it because it is user pays.' So what looks like quite an innocent provision is, I am certain, going to add to the regulatory burden on small business.

The existing regulation of childcare centres is sound. When centres apply for childcare benefit, in other words for the right to receive government assistance, they do have to demonstrate that they are financially sound, they do have to demonstrate that they have got it together and they do have to demonstrate that their operation, not just financially but in every other sense, is a good and proper one. We in the coalition are happy with that. We are quite suspicious of a bill that imposes a greater regulatory burden on the sector. Large providers are accountable to shareholders and boards. There is little point in reinventing the wheel and giving departmental staff access to financial records that they may or may not be able to interpret.

This legislation also fails to clearly restrict the types of evidence that may be called for by the department. That is what I would allude to as a fishing expedition, where something else that the secretary may want the secretary is entitled to ask for. I understand that in drafting laws we cannot be too prescriptive. We do not know what we may encounter down the track so we have to be careful. But I also think that if we leave it wide open we could have overzealous bureaucrats, newly appointed to the financial viability framework for large childcare providers section in the department, deciding that everything is not all right out there and that more information needs to be sought and more statistics provided.

When looking through the types of information to be provided I was alarmed that you need to make the government department aware of such things as other investments the childcare operator might be involved in. I do not know that it is any of the government department's business. It is a government department's business that you are operating a sound organisation and, as I said, you are required to provide that information anyway. But it is not the government's business to know what else you might be investing in or the concurrent activities of other investors in your organisation who may have a 15 per cent—that was the figure quoted—shareholding or investment. Why is all that relevant? There are some transactions that take place in the private sector, within small businesses, that this government has no right to know about. Why should the sector itself be charged with the cost of providing that information? It looks like that is what this bill is going to do.

The coalition is tired of the government's obsession with increasing the burden on business. A prime example of this is its decision to have employers play the role of pay clerk for the Paid Parental Leave Scheme, which I am sure will apply to small businesses in the childcare sector, instead of leaving that role with the Family Assistance Office. That is where it started out, so presumably the software and infrastructure are already there in the Family Assistance Office to enable it to continue to be the pay clerk for the Paid Parental Leave Scheme. After a mere six months of the scheme, the government is insisting that the responsibility go back to small businesses, which just underscores its approach. We want a commonsense approach to ensure that business is not required to hand over all manner of information—frivolous, commercial, repetitive—to the department when there no legitimate need. With this in mind, I move:

That all the 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:

(1) notes:

(a) the bill proposes that information will be obtained to determine whether the operators of child care services are financially viable, and likely to remain so;

(b) the bill also proposes that financial information will be obtained relating to large long day care centre operators;

(c) the growing burden of red tape and regulation imposed on small businesses, not-for-profit organisations and industry by the Gillard Government; and

(d) that the increasing regulatory burden represents a broken election promise whereby the Labor Government said that it would only introduce a new regulation after repealing an earlier regulation: a "one in, one out" rule; and

(2) calls on the Gillard Government to immediately adopt the Coalition's red-tape reduction policy which will seek to reduce the cost of the Commonwealth's regulatory burden by at least $1 billion per year."

The DEPUTY SPEAKER ( Ms AE Burke ): Is the motion seconded?

Mr BALDWIN: I second the motion and reserve my right to speak.