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Thursday, 10 February 2011
Page: 483

Senator JACINTA COLLINS (Parliamentary Secretary for School Education and Workplace Relations) (1:43 PM) —I would like to thank senators for their contributions to this debate. I also note the Greens’ commitment to the more regular payment of the childcare rebate. It is an issue I have been following for many, many years, which I will come to in a moment. The government, of course, shares this commitment. It is why we moved from annual payments to quarterly payments in 2008 and why we committed, from 1 January this year, to giving families the option of having the rebate paid fortnightly. Acknowledging Senator Hanson-Young’s comments, we will be introducing legislation for fortnightly payments shortly. Receiving their rebate from the government closer to the time that their childcare bills arise will ease the pressure on many families’ weekly budgets.

Once again I would like to draw the attention of senators to the importance of this bill. This measure will return the childcare rebate annual cap to $7,500 per child per year and pause indexation of the annual cap for four years until 30 June 2014. This is in order to generate $86.3 million of savings that will be directly reinvested to support the government’s quest to increase the quality of child care and early education in Australia. It in part answers, although again I will come to more detail, Senator Xenophon’s point about where the money for the quality reform agenda should actually come from.

The evidence is clear that the early years of a child’s life are critical. In fact, a child’s experiences in their first five years shape their future outcomes for life. We have heard this not only in the Ken Henry review but in myriad productivity related reports covering education and other aspects of the economy. It is extremely important for Australia’s future. This measure will return the childcare rebate cap, as I indicated, to $7,500 per child and pause indexation of the annual cap for four years in order to generate the dollars to be directed towards the national reform agenda. The government firmly believes that the 800,000 Australian families that place their children in care each week deserve to know that when they drop their children off to care they are safe and in happy and stimulating environments. Yet although we know that many childcare centres across Australia are doing well and certainly on international standards they are doing very well, the National Childcare Accreditation Council’s latest report shows that, sadly, too many childcare centres are failing to meet basic safety, hygiene, education and wellbeing standards. For instance, of the 1,129 centres that received an accreditation decision between 1 January and 30 June, 30 per cent had failed to ensure that toileting and nappy change procedures were consistent with the advice from recognised health authorities and 32 per cent had failed to ensure that potentially dangerous products, plants and objects were inaccessible to children.

These figures demonstrate just how important it is to support our hardworking and dedicated early education and childcare workers to do the job they do best and to lift the quality of child care and early education across Australia. That is why we are working in partnership with state and territory governments to implement this national quality framework that will lift standards of child care across Australia. Through the national quality standard we will improve staff to child ratios so that every child gets more individual attention and care. We will raise staff qualifications to ensure staff are better able to lead activities that help children learn and develop. We will introduce a quality rating system for all childcare centres so that parents know the quality of care offered and can make more informed choices. And we will reduce red tape related to services so that providers only have to deal with one regulator and can spend less time on paperwork and more time on the care of the kids that they are caring for.

While the opposition wanted to put the national quality standard on hold indefinitely, the government believe that we can and must do better when it comes to the safety, wellbeing and early learning of our children. That is what parents expect from us, and through our quality reforms that is what we will deliver. Importantly, this measure will also help fund the government’s $59.4 million investment in improving the quality of over 140 budget based funded services. These services are predominantly located in rural and regional Australia and provide care to some of Australia’s most vulnerable children. Our investment will be targeted at supporting services to provide children with higher quality early learning services which will critically shape their future health, development and wellbeing outcomes. The childcare budget measures will not negatively affect the vast majority of families but will fund essential improvements in the quality of care from which 800,000 Australian families will benefit.

At this stage I would like to concentrate on that very point about where better quality in child care should be funded from and also on some other of Senator Xenophon’s comments with respect to where the impact of these particular measures is likely to be felt. The question that has been raised is whether low-income families as well as wealthy families will be hit by the government’s move to return the annual childcare rebate limit to $7,500. The answer is a very clear no—the impact is quite limited. This measure will not affect the vast majority of Australian families. In fact, in the year 2010-11 only three per cent of families will be affected by the change, and less than one per cent earning less than $100,000 per year. But it will fund essential improvements to the quality of care, from which 800,000 Australian families will indeed benefit. I am aware of the media claims that families with income as low as $37,000 will be affected by this measure. However, families with this level of income would receive significant assistance through the maximum rate of the childcare benefit. A family earning $37,000 a year and eligible for maximum childcare benefit of $3.68 per hour would need to be using full-time child care at a cost of $94 per day, or over $24,000 per child per year, to exceed the childcare rebate limit of $7,500. On average, families use only 26 hours of care per child per week. Families with one child in care cease to be eligible for the childcare benefit when they have an annual income of around $134,000. Families with this level of income, or higher, would need to be paying around $15,000 a year in childcare fees per child—remember that this is per child—before they reached the rebate limit.

In this debate senators and the public more generally need to be reminded that the impact of these measures is very well targeted and highly contained. But it does take us to the point that Senator Xenophon raised, which is: where should the money for quality be found? Indeed, the Prime Minister has also had to address this question on some occasions. As a past shadow minister for early childhood, I have noticed that some of the figures are actually referring to the impact of increases in costs while forgetting about the impact on increased costs of payments from the government through the childcare benefit or through the childcare rebate. So when we see some services saying that fees are going to increase by $10 a day or $30 a week they fail to account for the amelioration of the overall cost that occurs through the government’s other childcare support measures.

In that sense I think the Prime Minister’s response on this point is the most accurate. She said, ‘Yes, we do need to pay some more to ensure we have better quality in child care, but that cost is and should be shared.’ It is not being borne solely by parents. It is being borne also by the government not only through the cost-saving measures, such as those involved in this bill, but also through our ongoing payments through the childcare benefit and the childcare rebate.

I will address the issue of what the government is doing about affordability more generally. This is quite a longstanding issue. In fact, in my initial comments I entered the debate at a certain point in time whereas I should have perhaps gone back about four years earlier. I think I cited that the changes were made in 2008 to the annual payments of the rebate. What is forgotten is that the policy taken by the coalition to the 2004 election had a very interesting mechanism in it; it introduced the rebate back then at 30 per cent, which this government increased to 50 per cent to assist in affordability, but the very odd measure at that stage was that families needed to wait not only to claim it in their tax return but one year further. I recall this because I saw it as somewhat of a bizarre mechanism because I could not think of any other measure, and still no-one has brought to my attention any other measure, in the tax system where families would need to essentially wait one year further before they could present a claim. This was obviously done by the Howard government as a means of delaying the cost of election measures that they were introducing in 2004. A number of families complained about having to wait almost two years to receive the government assistance that would help them bear the cost of child care. We acted to ensure that that was improved to annually and we have now improved it to quarterly. We are now looking at making it even better by giving families the opportunity of fortnightly benefits. It is important for us to remember that when this tax rebate was first introduced families needed to wait up to two years for assistance.

Unlike the Howard government, this government is committed to delivering affordable, high-quality early education and care, and to demonstrate that fact there are quite a number of measures beyond those that are included in this bill. I will cover a number of these. Overall we are investing $14.9 billion over the next four years to help over 800,000 Australian families each year with the cost of child care. We have raised the childcare rebate from 30 per cent to 50 per cent of parents’ out-of-pocket expenses and increased the maximum for each child in care to $7,500 a year. Compare this to the assistance under the former coalition government, where the maximum was only $4,354 per year per child. Since 1 July 2008 this 72 per cent increase has assisted 735,000 Australian families to pay for their child care.

We know that the proportion of family income being spent on child care out-of-pocket costs has almost halved since 2004. Perhaps Senator Hanson-Young and Senator Xenophon should be very mindful of that figure. Whilst we are certainly seeking to implement some targeting measures to help us fund the quality reform agenda, we do need to be reminded of this point: the proportion of family income being spent on child care out-of-pocket costs has almost halved since 2004. It is dropping from 13 per cent to just seven per cent in the year 2010 for families with one child in care and earning $55,000 per year.

We also promised to pay the childcare rebate quarterly so that parents do not have to wait until the end of the year or, as it was originally, the end of the tax year after the tax year, to receive this crucial assistance, and we have delivered on this commitment. When this amendment is being addressed we will be providing fortnightly childcare rebate payments and these will provide significant benefits to families which will make it easier to manage childcare costs and the family budget.

I will go back to the most significant point and perhaps the most critical principle of this debate. I think Senator Xenophon hit it right on the head when he made the point that everybody agrees that the quality of child care needs to be improved considerably. On that point, he again raised the issue of who should pay for this. If you heard the original debate or if you listened to some of the media coverage you would get the impression that the cost of the quality reform agenda is to be met solely by parents and families. This argument needs to be comprehensively debunked. The Labor government has introduced a range of affordability measures that have halved the out-of-pocket expenses for child care in recent years, and in the future this will continue to be the case. We have the circumstances where families will be faced—

Debate interrupted.