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Thursday, 10 February 2011
Page: 482


Senator XENOPHON (1:39 PM) —I indicate that again I cannot support the Family Assistance Legislation Amendment (Child Care Budget Measures) Bill 2010, but it is worth reflecting on what Senator Pratt said. The 2010-11 budget provides $273.7 million for the introduction of the National Quality Framework for Early Childhood Education and Care, the NQF, and the commentary is that this framework will involve, amongst other matters, a progressive phase-in of improved carer-child ratios and higher qualification requirements for carers. These are unambiguously good things. However, the flip side to that is that it is expected that, of necessity, this new national quality framework will increase the costs faced by childcare services, who will then in turn seek to pass on those costs to consumers. That is one of the policy dilemmas and policy conflicts inherent in this. No-one is questioning the need for higher standards, but it will come at a higher cost. The question is: who ought to pay for that and where should the money be found?

I did not support it in the last parliament and I do not support it now. This legislation will reduce the annual childcare rebate limit from $7,778 to $7,500 and will also crucially cap indexation for the next four years. The government says it is doing this to save $86.3 million over the next four years, but what concerns me is who will actually pay for this. It is my belief it will be the mums and dads who put their children into childcare centres. Under these changes the cost of care could increase by as much as $22 a day, and I oppose this additional impost on Australian families. The costs associated with child care are already significant and it makes no sense at all to be adding to the burden on families and making it even less affordable for parents to access child care.

It is rather ironic. On the one hand, the government wants to support parents with paid parental leave—which is completely laudable, something I strongly support. I thought it was a good and significant step in dealing with the issue of paid parental leave. The government should unambiguously be commended for that. But, on the other hand, the government penalises parents when they want to return to work by making child care less affordable. That is a consequence of this. The case for opposing the cuts to the childcare rebate cap has been put very well by the Australian Childcare Alliance and Childcare Associations Australia. The alliance makes the point that women’s participation rates in this country are extremely low by OECD standards and are at their lowest amongst women aged between 25 and 44, the prime child-bearing years. Secondly, the Henry tax review was asked by the government to make coherent recommendations to ensure appropriate incentives for, amongst other things, increased workforce participation. The key finding of an April 2010 Treasury department working paper was:

…  in contrast with previous Australian estimates, the cost of child care does have a statistically significant and negative effect on the labour supply of married mothers. This finding supports policy that reduces the costs of child care to encourage maternal labour supply.

That is what the Treasury paper said, and that makes a lot of sense.

I think it needs to be placed on the record that I believe this is a bad piece of legislation. We should look at the broader national interest in terms of productivity. By making child care more affordable, you will increase workforce participation rates. That is a good thing for our productivity and a good thing for our nation, and this piece of legislation would go against that. When you consider it in the context of the budget, $86.3 million is not an insignificant amount but it is not a huge amount. But this is something that will be hugely felt by families across the country. It will unfairly increase the costs of child care and therefore it ought to be opposed. I support the measure to change payments to fortnightly but cannot support this legislation to reduce the annual rebate limit and to cap indexation for the next four years.