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Paid Parental Leave Bill 2010; Exposure draft of legislation implementing the government's announced paid parental leave scheme

CHAIR —Welcome. Thank you for giving up your time and coming to talk with us. You have information about the protection of witnesses and evidence. We have your submission; thank you. I invite you to make an opening statement and then we will go to questions.

Ms Bridge —The Australian Childcare Alliance, which is the auspices under which Australian Childcare Alliance and Childcare Associations Australia are identifying as we progress through an amalgamation process, represent in the vicinity of 3,000 long-day-care centres Australia wide. Our staff care for in excess of 400,000 children. I am the president of the Australian Childcare Alliance and executive director of the combined group.

We applaud the government’s initiative to support mothers and their young families and to encourage women to return to the workforce after having a child. As one of the largest employers of women of child-bearing age we believe this policy should and must be supported by business. However, we have some serious concerns about the cost and administrative burdens on our members, the majority of whom are small business owners and operators. These members need to be considered for exemption from some of the more onerous administrative tasks of the scheme. Childcare Alliance Australia represents 70 per cent of the long-day childcare sector and members range from those operating very small childcare centres with an average of six staff per day to larger centres employing, on average, 24 staff. Averaging this out across Australia at, say, 16 staff per centre, inclusive of relief staff, our representation is in the vicinity of 48,000 staff, which is about half of all those paid primary contact staff employed by Australian government approved childcare services.

Our centres employ mostly women, aged between 17 and 50, with the majority in the 17- to 35-age group. CAA is concerned that, considering the considerable number of small businesses we represent, we have not been included in the reference group chosen to oversee the introduction of this new system. We would seek urgent inclusion on this important panel of stakeholders. As the federal government will appreciate, its increasing regulatory requirements through the introduction of national standards will mean that the number of staff employed in the industry will also increase substantially.

Included in our concern is: the administrative burden on small business, the recruitment of suitably qualified relief staff, payroll tax inclusion, the review of the superannuation liability in two years time, worker’s compensation liability, and the need for a comprehensive education program. Whilst we strongly support a Paid Parental Leave scheme, our members will face increasing financial and administrative burdens as a result. Unfortunately, increased operational costs will be passed on to the consumers by way of increased fees, and in this case consumers are the working families. As such, we seek government support in neutralising the negative aspects of its scheme in the long-day childcare centre sector.

CHAIR —Thank you, Ms Bridge. I know that in your submission you have raised a series of different points and you can be assured that all those will be before the department—we will be raising them. I do not think that it is our job to answer all your questions today but, nonetheless, you have covered specific points about the impact on your industry so we will go to questions and that will be fine.

Senator ADAMS —Ms Bridge, do you think there should be a Paid Parental Leave scheme?

Ms Bridge —Our secretary is very supportive of a Paid Parental Leave scheme. We speak to our workers constantly about it and they are quite excited that this is being recognised now.

Senator ADAMS —And for the 18 weeks versus the 26 weeks, how do you feel about that?

Ms Bridge —It is something that we have not discussed as an association and I think that would be individual to each person who was off on leave. At the moment a lot of our staff take 12 months unpaid leave. But there are also staff who are back within a matter of a couple of months because of the need for them to work.

Senator ADAMS —You were talking about small business and, more or less, the burden that it would place on them as far as trying to deal with the funding. Could you just elaborate a little bit more on that?

Ms Bridge —Most of our childcare centres are small operators. We have services that are licensed for 18 children and those little operators are struggling. They still have to do the huge amount of work that is expected by both the state and federal governments and they are really drowning in it and finding it very hard to keep going. We are just going to add another level and, whilst we understand that hopefully in the little centre with six they would not have too many off on paid parental leave at the same time, it is still just another level of administration that they have to be very mindful of and deal with to ensure that they meet all the compliance requirements.

Senator ADAMS —Have you looked at the coalition’s scheme versus the other one?

Ms Bridge —I have not analysed it to a great extent.

Senator ADAMS —I would just like to comment that with the way the funding is done, it is big business that will be actually funding the—

Ms Bridge —Yes, the percentage—

Senator ADAMS —scheme rather than small business, so that is taking the burden away from small business. Also they are looking at the government doing the administration through the Family Assistance Offices, making the payments rather than small business having to do it themselves. Have you a comment about that?

Ms Bridge —I think that in our submission we have addressed that. If the Family Assistance Office is doing it for the first six months, could they not continue to do it for the rest of the period, because they will be set up to do it, rather than then moving it over to the small businesses to do it themselves?

Senator FISHER —In that context, how would you define ‘small business’?

Ms Bridge —The definition by which we fall under small business in other areas is a turnover of $2 million a year. I would not know what would be a small business. In the sector we look at a small business as somebody who is operating a business in a community by themselves and not somebody who has got human resource sections of their department. They are a small business, a small operator, and doing it all themselves.

Senator FISHER —So you are saying that if the government implement this scheme then they should facilitate payments to be made by your members and, in respect of staff utilising the paid parental leave benefits, you are suggesting that those payments should continue to be made through the Family Assistance Office for your small business members. What are you saying to the government about what the definition of ‘small business’ should be, as part of that recommendation?

Ms Bridge —We have not stated to the government what the definition of ‘small business’ would be because we firmly believe the government already has an opinion of what small business is. But, as I am saying, it is usually people who are running the business themselves. An operator with one or two centres is considered a small business.

Senator FISHER —My final question on this—and thank you, Chair, for your indulgence—is: do you see a difference in that respect between your small business members and other small businesses in the community?

Ms Bridge —No. I think that the tyre fitter down the road would have as much difficulty with the paperwork.

Senator FISHER —Thank you.

Senator ADAMS —I would like to talk about payroll tax, which you brought up in your submission. Have you spoken to the government about the problem with payroll tax?

Ms Bridge —Yes. We have not received any decision back yet as to whether the paid parental leave amounts would be included in payroll tax.

Senator ADAMS —When did you write to them or talk to them?

Ms Bridge —We have spoken with them over the last month.

Senator ADAMS —Thank you.

Senator FURNER —Ms Bridge, with regard to the keeping in touch days, the 10 days per period, how do you think that would operate for your members in some of those businesses?

Ms Bridge —Keeping in touch with our worker who is on paid parental leave?

Senator FURNER —That is correct.

Ms Bridge —I think that is something that happens automatically in a small business. You welcome that baby into the small business family, because that worker, if she has been there long enough to get paid parental leave, would certainly be an integral part of the business. Usually there are visits back and forth. It is probably more on a social level, but that contact would certainly be happening.

Senator FURNER —Okay. We heard from the Australian Retailers Association this morning, and they represent a group of employers ranging from the likes of Myer—large organisations where they have human resources management—down to small mum-and-dad stores and those types of businesses, and they described the matters associated with the administration of those small businesses. How do you foresee the PPL working with regard to administration in the small businesses that you cover?

Ms Bridge —Basically, we see our association members—apart from the corporate membership that is there—as being small business operators because they are basically in a community being a small business. The impost on them would be that they would have to deal with all of this. It is not something that they are doing at present and it is additional; it does not matter what size business it is. It is why we have asked for the whole of the childcare sector to be exempt: we already have a huge administrative burden in providing information to both the federal and state governments. There will also be an increase in that with the inclusion of the rollout of the national quality framework and the national standards in child care.

Senator FURNER —How do their payroll arrangements work currently? Do they have MYOB to facilitate their payroll arrangements?

Ms Bridge —Up until recently we were a sector that was not really IT savvy. However, over the past few years we have had to be computerised to interact with the government on the payment of the childcare benefit. Many of our employers and operators have learnt that system, but they are not fantastic with other systems. Some outsource their BAS; some do use MYOB. It would be difficult to say—I would only be making a guess—how many are really able to do everything they do on their computers, but there would be quite a substantial number who would be having difficulties.

CHAIR —I want to follow up on that, as I did earlier with the retail association, to identify exactly what the administrative impost is going to be. In your submission you say that one of the concerns is that your industry is facing another round of things for which you have to comply with the national standards. My understanding is that that is coming in and that there are processes that you have to acquit against the national standards in order to be able to report that each childcare centre meets those needs. So you have that. You also have the ongoing interaction with the federal government on your payments your subsidies, and at the state government level you have things about regulation.

Senator Furner has just gone through the variation in the payroll systems that people have. On the basis of my experience I have tried to go through to see just what the added impost would be per person in having to handle a staff member who was on paid parental leave. For Mr Zimmerman, it was becoming an employer and doing the certification for that, which is an interaction with a national group. So you have to do that, and then you have to acquit the funding that comes through to pay that person through your payroll system on the same day as they would have been paid anyway. So there is no difference there.

I certainly take the point which was raised that, should something go wrong and there was a complaint, you would have to go through the complaints system that was set out. But I am struggling a bit to see, if you are looking at this process alone as being the administrative burden, whether in fact it would be so scary if people could see how it was going to work. On the basis of your submission it seems to me that there is an amalgam of things that are scaring your members and that at the moment they are saying, ‘Too much; it’s all too much.’ Have any of them said to you, ‘It’s the paid parental scheme and how it’s going to work that is the thing that is really going to put me over the edge’?

Ms Bridge —I think it is the fact that it is something else that they are going to have to learn and, if they get it wrong and there are some errors in it, there could be repercussions. That is why I go on, further in the submission, to talk about the education—

CHAIR —Absolutely and without question the education component is important. In the proposed scheme there are certainly significant penalties if people are doing the wrong thing, but it is also a question of building up the confidence to say, ‘What support is there and how do you stop doing the wrong thing?’ I am getting the sense that it is the fact that this is just one more thing rather than the thing in itself that is the issue for your industry.

Ms Bridge —We have members at the moment who are at the point where they cannot read any more. They feel that it is all panic, that everything is coming in and they are saying about this one, ‘We can’t do it.’

CHAIR —So you are raising an industry issue about this transition period in your industry. Is that right?

Ms Bridge —Yes.

CHAIR —We will definitely take that up in terms of the process but, from the point of view of a former personnel person, I am just trying to work out why these people are so fearful of this scheme in itself.

Senator FISHER —I refer to your recommendation about government intervention to make sure that your member services remain compliant during the period of absence due to paid parental leave of a staff member. Your members would have staff who today would be on paid parental leave, so how is that going to be any different in the future?

Ms Bridge —At the moment we do not have staff on paid parental leave.

CHAIR —Is it not in your awards?

Ms Bridge —No.

Senator FISHER —So on what basis are you able to say that there are nonetheless none of your association’s members who are providing that as a benefit over and above the award?

Ms Bridge —We cannot say. There could—

Senator FISHER —There could well be, couldn’t there?

Ms Bridge —Yes.

Senator FISHER —So the fact that it is not a condition of award based employment does not mean that you do not already have members out there doing it?

Ms Bridge —No, that is quite possible.

Senator FISHER —Presumably it could mean that you have members out there facing this challenge and managing it?

Ms Bridge —Yes.

Senator FISHER —You request in your submission ‘intervention by government to ensure that services remain compliant’. What do you mean by that?

Ms Bridge —Basically ensuring that, through the education processes, if services are having difficulties, we can get assistance from government—that we will not just be left there and have to struggle through it. If somebody is doing it manually—and some people, probably more than one or two, are still manually paying—and if they do fall into issues, we just need to know that before compliance comes in they can get assistance and be helped through it.

Senator FISHER —Say your recommendation refers to remaining compliant with the paid parental leave obligations—

Ms Bridge —Yes.

Senator FISHER —not other child care obligations?

Ms Bridge —There is a section there where we are talking about in the amount of time that staff are absent we are having huge difficulties recruiting suitably qualified staff in child care.

Senator FISHER —You already have those issues, don’t you?

Ms Bridge —We certainly do have those issues.

Senator FISHER —So what are you saying about the paid parental leave proposal in that context?

Ms Bridge —Just that, if we are looking at this being as popular as we think it might be, it might put extra stresses on us. If we have a three/four staff off on paid parental leave, in some areas it would be nigh on impossible to replace that staff with a qualified. We do not want to have to be in a position where we would have to shut a room down because we have somebody on paid parental leave and not provide care to those children, which can happen if you are not meeting the ratios with the qualifieds. So we need to know that, if it does happen, if we have done the advertising and we have done everything, government will consider that we are in a bit of a different position to somebody who can put somebody behind the cash register; we cannot just put somebody in charge of a group of children.

Senator FISHER —Retailers might have a different view about just putting someone in front of the cash register. At what point, then, would your members say that paid parental leave is bad for business? There must be a point, if the scenario that you are exploring were to unfold, where you did not actually have the skilled hands on deck to deliver the very child care services that your members are set up to provide. At what point would you say, ‘Compulsory, effectively, and paid parental leave is a bad thing, if it is ending up with this result where we cannot do our business’?

Ms Bridge —We certainly would like to never get to the point where we think it is a bad thing, because we do think it is a good thing. What we are saying is that there has got to be something that government can do with federal or state regulations if we are unable to replace somebody—and we want to and we have done everything we can—where we may be able to have extensions in getting that placement.

Senator FISHER —But what, Ms Bridge, would work if governments of whatever persuasion are not able to deliver that to your child care centres today to fill the skills shortages and gaps? It may be exacerbated in the scenario, because it is only going to be for a short window—up to a nine-month maximum window, not quite that long.

Ms Bridge —There are centres now who are unable to open rooms because they cannot get suitably qualified staff.

Senator FISHER —Yes, so government ain’t helping you with that right now.

Ms Bridge —No, they are not, but we want to support the paid parental scheme.

Senator FISHER —’At what cost?’ is what I say, because going to the next recommendation in your submission about the administrative burden, you talk about requesting that the Family Assistance Office continue to make payments for child care personnel to alleviate the additional cost on families. Earlier on in the submission you say:

The additional time and handling of the administrative requirement of the Paid Parental Leave will increase costs to services. This will lead to a further financial burden on our families ...

By that you mean your paying customer families, don’t you?

Ms Bridge —If there is recognition that some would pay a percentage in some areas for administering paid parental leave, we are assuming that there will be a cost in doing it. That cost could be with somebody who has to help out in a service during the administration of it. If there are costs, they would certainly have to be—

Senator FISHER —They will be passed on to working families, you are saying, by your members?

Ms Bridge —Yes.

Senator FISHER —Okay. What do you then think about paid parental leave, which is supposedly set up to benefit working families who make the decision to have a child, ultimately impacting negatively on those very working families in the scenario you have outlined?

Ms Bridge —I do not think under the current financial status of many of our sole operators and small businesses that they can absorb any more costs. They just cannot do it. Some of them are concerned about hanging on until the end of the year. It is fairly critical. Operating a childcare centre is not like what people thought it was years ago. A lot of these operators are being stretched to keep the doors open and to maintain their business and hours.

Senator FISHER —So you are saying this is another factor. It could well be the straw that breaks the camel’s back.

Ms Bridge —We do not know what the costs involved will be yet. Hopefully, they are not going to be that exorbitant. We are just saying that if there are costs, they will have to be passed on.

Senator FISHER —So what is the point of something that is set up to benefit in this case working families that ultimately results in costs being passed on to them? Isn’t that a round robin? What is the endpoint?

Ms Bridge —The thing is the costs would not only be passed on to those families but they would be shared by all the families in the centre. If we have 70 children a day, we have about 130 families in the centre. The costs may be small when they are shared across the whole community of the service.

Senator FISHER —Thank you.

CHAIR —Do you have anything to add that we have not covered, Ms Bridge?

Ms Bridge —No.

CHAIR —Thank you very much for your time and your effort.

Proceedings suspended from 3.37 pm to 4.17 pm