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Wednesday, 15 June 2011
Page: 6059


Ms LIVERMORE (Capricornia) (09:57): I am very pleased that the House has had the opportunity to return to this very important piece of legislation and that I have the opportunity to continue my remarks. When I was last speaking, I was talking in general terms about what the Family Assistance Legislation Amendment (Child Care Financial Viability) Bill 2011 is seeking to achieve and, very importantly, what it is seeking to avoid. And very clear in everyone's mind and memory are the events of late 2008, when ABC Learning centres collapsed so spectacularly and potentially disastrously. What we found out going through that process was that ABC was a ticking time bomb of financial incompetence and risk-taking. It was a ticking time bomb that was all the bigger by the time it blew up as a direct result of the Howard government's preference for letting the market rip rather than taking any responsibility for the childcare system relied on by millions of Australian families.

At the time it became insolvent, ABC Learning owned or operated just over 1,000 childcare centres in Australia, caring for around 120,000 children from 95,000 families and employing 16,000 childcare workers. It was the largest single provider of child care in the country, with up to 20 per cent of long day care centres and 24 per cent of all long day care places. Those figures and the growth of ABC Learning had all happened in the space of fewer than 10 years, with ABC Learning only listing on the Australian Stock Exchange in 2001. A lot of that growth had come from the acquisition of existing centres. So ABC came to completely dominate the market. We got to the stage where the collapse of ABC Learning, when it came, was potentially catastrophic for the day-to-day functioning of families and their employers.

As a member of a working family myself, I know how finely balanced families are and how the carefully constructed schedule of work and family obligations is only made possible by the availability and reliability of child care. Take child care out of that delicate balance and you have major consequences for family finances and family relationships. That is what families were faced with the day the banks moved on ABC Learning. Those family members are also employees of thousands of businesses across Australia that all of a sudden were faced with accommodating panicked requests for unscheduled leave from parents whose childcare arrangements had evaporated for what looked at the time to be an indefinite period. The collapse of ABC happened virtually overnight, but the government was very quick to appreciate the consequences for families and for staff of the centres. The government acted immediately to keep centres open in the first instance and then worked with the receivers to carefully manage the process of assessing individual centres, offering some for sale, all the while continuing to provide financial support where necessary to minimise the impact on families and the employees of ABC.

By intervening so quickly and responsibly the government was able to protect families and staff from the worst of the ABC collapse. However, it took an enormous effort from the government, from the then Minister for Education, Julia Gillard, down, and it was a very expensive exercise. In total the government put up $58 million to shield families and childcare workers from the consequences of ABC's corporate failings. Following initial discussions with ABC Learning's banks and the receiver, the government announced an initial support package of $24 million to ensure the centres could continue to operate to the end of 2008 while the receiver carried out a proper assessment of the viability of each centre. I know that was not an easy task because of the appalling state of ABC's financial records, something that will no longer be tolerated under the system of responsible monitoring established by this bill.

Later in the administration process the government made available a further $34 million to keep 262 centres open while the court-appointed receiver managed the sale of the centres to new owners who could then continue to operate them. A $15 million loan was ultimately made to the Good Start consortium to help it to purchase and operate 678 of the former ABC centres. That money will be repaid in full, but the government made sure it was there when it was needed. On behalf of the families in my electorate who had children in ABC centres and ABC staff, I say that that was money well spent. In the end over 90 per cent of ABC centres continue to operate for Australian families today.

The government did what we had to do during those difficult times of 2008 and 2009, but we never want to find ourselves in that position again. We have already acted to introduce measures to better ensure the financial viability of childcare centre operators and to protect parents in the event of any future closures of centres for whatever reason. New applicants seeking to operate a childcare centre and to receive childcare benefit payments will now undergo closer scrutiny of their financial background and that of any key personnel associated with the centre.

Since 2010, the operators of childcare centres are required to give the department a minimum of 42 days notice of their intention to close. This protects parents from the ABC situation of showing up one morning to find the door of the centre closed. Families should not have their lives thrown into disarray like that. It is important that, if children have to move centres, families have the time they need to find a centre they feel comfortable with and children have time to settle into that new centre. It should be not done in a way that causes stress or employment difficulties for parents. Children are usually fairly resilient and adaptable; nonetheless, families should have the chance to change their child's care in a way that causes the least possible disruption and distress to the child.

This bill takes the scrutiny of those organisations that operate a large number of childcare centres even further. The government is not going to ignore the lessons of the ABC debacle. ABC was allowed free rein by the previous Howard government while it gambled with the lives of its employees and the families who relied on ABC as a vital piece of their work and home life jigsaw. One lesson from the ABC collapse is that government must take responsibility for ensuring the stability of the childcare sector. The other lesson is that special attention needs to be given to the dynamics of the sector.

The collapse of ABC, the subsequent sale of centres and the emergence of new providers have resulted in one large long day care centre operator and a number of medium-sized operators. This is a trend that is likely to remain in place in the future. We cannot leave ourselves exposed to the risk of any of these large providers running into financial difficulty and having to close. The measures in this bill will therefore apply to providers that operate 25 or more long day care services.

There are currently six providers that will be required to comply with the new financial viability process. Those providers will be required to submit financial reports to the department on an annual basis. Where there are concerns about the financial position of an entity, the department will be able to seek more frequent reporting from the entity to monitor its financial position. In addition, the bill gives the government greater powers to audit any of those large long day care providers where there are concerns about the ongoing financial viability of the provider. For the first time, large long day care providers will be required to demonstrate that they are financially viable as a condition of initial approval and they must continue to demonstrate this each year. This is a sensible and reasonable early warning system which is all about preventing the kind of chaos that threatened families and, indeed, our whole economy when ABC collapsed almost without warning a few years ago.

As a mother with children who attend a local childcare centre most weeks, I know how hard the staff there have to work. After providing fun and stimulating activities for the children and giving them individual care and attention and documenting their progress, it is hard to see how those workers could fit anything else in. I would hate to think that this bill placed any greater burden on childcare workers, but that is something the government is very well aware of. There has been consultation with the childcare sector, particularly those affected operators, about these proposals and the consensus is that they do not expect the financial scrutiny requirements to be difficult or onerous. The view was that the financial statements required are already prepared and that these new requirements could be met using existing financial systems and resources.

There was certainly no indication during the consultation that the measures in this bill will lead to an increase in childcare fees. That is just the opposite of what this bill seeks to achieve. We want to make sure that childcare centres remain strong and viable and therefore open so there is choice and competition in the sector for the benefit of parents and children. The government has announced $1.9 million to support these and other regulatory measures that will ensure the stability of the childcare sector. That is just part of the historic levels of funding the government has committed to in order to enhance the quality and affordability of child care for Australian families. That includes $273.7 million to support the introduction of the new National Quality Framework for Early Childhood Education and Child Care.

The government has also acted to help families with the costs of child care. One of the first things we did on coming to government was to increase the childcare rebate substantially. Families can now claim 50 per cent of their out-of-pocket expenses for child care, which is an increase from the 30 per cent rebate that was available under the previous government. The maximum amount of the rebate—the cap—was also raised at the same time that we brought it from a 30 per cent rebate to a 50 per cent rebate.

One of the other things we have done, directly in response to listening to families and understanding their daily and weekly needs to balance their budget and meet the costs of child care, was to increase the frequency of payment of that rebate. When we took over from the previous government we changed it from an annual payment to a quarterly payment, and as of 1 July this year it will become available to families on a fortnightly basis. Again, this was in response to the pressures families are under and is a very practical measure to help with the costs of child care.

Just as important as the affordability of child care is, of course, the stability of the sector. This bill gives the government more power to monitor the viability of large providers, which means that families can be more secure in the childcare choices they make for their children. I commend the bill to the House.