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Education and Employment Legislation Committee
06/05/2016
Estimates
EDUCATION AND TRAINING PORTFOLIO
Australian Skills Quality Authority

Australian Skills Quality Authority

[20:32]

CHAIR: Welcome, Mr Robinson and co.

Senator REYNOLDS: Good evening. Can you outline your new regulatory strategy please for the committee

Mr Robinson : Yes. Essentially, we have been evolving a regulatory strategy, which we originally started out with what inherited from the previous regulators that were established in each state and territory to do VET regulation, and that was to process applications for an initial registration or a re-registration, or to change the scope of that registration—so to add new courses and the like. We have been moving forward in trying to identify particular risks to the sector, both by looking at the risk of individual RTOs and making decisions about how much regulatory scrutiny we apply to each RTO based on that risk. We look at things like complaints information and information that comes in from stakeholders in the sector, and we use that to go beyond this issue of looking at each re-registration cycle of an RTO, to say, 'Are there some risks associated with that RTO here and now that we should be looking into right now?'

Senator REYNOLDS: So how many RTOs are there altogether?

Mr Robinson : Sorry, one other element of the first question.

Senator REYNOLDS: Sorry.

Mr Robinson : We are also looking at risks across the system, so we are going beyond the individual RTO risk to be identifying broader sets of risks that might be doing some harm in the sector. That is part of our work. We are becoming more strategic in looking at those issues. There are 4,600 RTOs roughly—I do not have the exact figure—and ASQA regulates around 4,000 of those.

Senator REYNOLDS: I can appreciate the need to have a very sophisticated risk based approach to this. Do you think that taking this approach is starting to assist you to better target your compliance activities?

Mr Robinson : Very much so, and that is the purpose of it. We reviewed our arrangements a couple of years ago and the government endorsed the proposed approach, which was to free up doing so much transactional work and looking at people who were not a high risk and to have much more scrutiny on people who we considered to be high risk. It is changing what we are doing. More of our audit work and investigatory work is being done on the basis of, for example, the complaints we get in from people about concerns about particular organisations and the like. We get to them much more quickly than we would have under the previous approach of waiting for them to apply for re-registration or a change to their registration.

Senator REYNOLDS: So it definitely is allowing you to put more of your resources into focusing on high-level scrutiny where the major risks are in your 4,000 organisations.

Mr Robinson : Indeed, and we have taken action to terminate the registration of some 10 per cent of that regulated community since we started, which is a very high—

Senator REYNOLDS: Over 400-odd?

Mr Robinson : Yes—389 I think is the figure.

Senator REYNOLDS: It is a bit late in the night for me to—

Mr Robinson : That is where we have actually taken the decision to cancel or suspend the registration of an RTO or refused to re-register it.

Senator REYNOLDS: That would certainly get the attention of the others as well, no doubt.

Mr Robinson : It has. We have also done work with other agencies like the ACCC and we are working more closely with the funding bodies as well around the country to identify from their information people that they are concerned about and for us to go and act on them from an earlier point.

Senator REYNOLDS: With the more focused compliance activities this year, are you focusing on any particular areas this year?

Mr Robinson : Yes. This year we have got a few priorities for our work. We are doing further examination of VET FEE-HELP providers that have been of concern. We worked through with the department looking at all of the VET FEE-HELP providers. We looked closely at 22 of them last year and we are looking at another 18 this year. The investigatory work has started on nine of those already. They have been identified through an examination of the VET FEE-HELP information that the department has, our own complaints data and other information that we have gleaned about RTOs of concern.

Senator REYNOLDS: I understand you have some new processes for providing public notices of providers that are under investigation. Again, that is a bit of a tongue twister at this time of night. Is that correct?

Mr Robinson : Previously we had been not making public our regulatory sanctions until the appeal process had been fully exhausted but now we are in the process of making those decisions known at the time when we make a regulatory sanction. So if we decide to cancel the registration of a RTO we previously would have gone through a process of giving them a notice of intent. We are not publishing at that point but once we have taken a decision to cancel that RTO's registration we are publishing that information. Before we used to wait until they had had a chance to exhaust their appeal process. So in a sense the difference is: if the police make an arrest they publicise that they have made an arrest and then there is a subsequent stage when there is a conviction; in our regulatory sense we are making the decisions known at the time when the arrest is made.

Senator REYNOLDS: What is the importance of this? Why have you changed the policy?

Mr Robinson : We did get a lot of criticism last year about our work with VET FEE-HELP providers because although we had done a lot of things about those providers, we had not published the outcomes of where we had gotten to with those. More importantly, we also want there to be a deterrent effect to the other RTOs: if you are going to play in this space—

Senator REYNOLDS: You have to do the right thing.

Mr Robinson : people have to be informed about it.

Senator REYNOLDS: What would you describe as some of the complexities that you are currently facing once cases go to the AAT?

Mr Robinson : That is a good question. The AAT process is one where the AAT members who hear the case make a fresh decision, as though they were the ASQA regulator. It is not, 'Was the ASQA decision faulty in the first place?'—this may be some months or even up to a year later when it gets to an AAT meeting—it is, 'Can that RTO now provide sufficient information to say that it is compliant with the standards, even though it wasn't before?'

We are concerned about that issue, that in some cases people have been there before and have used the review process to finally scrape back into the system because they have done enough to suggest that they are going to mend their ways. We always follow up on those cases within a year, and when we go and look at them again some of them do achieve lasting compliance but some of them do not. We are concerned about the repeat offenders.

Senator REYNOLDS: Given that there is that time gap, do you also find that there is sometimes a disparity of information in terms of what is available to the AAT and to yourself?

Mr Robinson : No, the AAT has full information and they ask for further information from us, or our assessment of where the RTO is up to, at that point in time.

Senator REYNOLDS: It has come to my attention that in your newsletter of April 2016 you noted that in recent years ASQA has been shouting from the rooftops about the need to enhance training and assessment practices in the VET sector. For exactly how long have you been shouting this message?

Mr Robinson : We have done some national strategic reviews of different elements of training. We have found that poor assessment by RTOs—

Senator REYNOLDS: I have to pick you up there. My question was not what you found. You said that you had been shouting for a long time; I am just wondering for how many years have you been shouting from the rooftops?

Mr Robinson : Our first national strategic reviews were completed in 2013. But I have to say on this question that the government and people in the VET sector have picked up a lot of the issues that we have raised in our recommendations. That is what I was about to say. The minister has had a task force operating that is looking at assessment issues. That work is coming back to the minister for consideration on further measures that can improve the assessment issues.

Since we have started shouting from the rooftops, the standards have been enhanced and new standards around assessment have been put into place. We have run a huge number of workshops around the country over the last 18 months to educate people about the enhanced assessment requirements. We have had around 5,000 RTO representatives attend those workshops.

Senator REYNOLDS: My last question relates to the strategic review of RTOs offering aged and community care sector training. Are you familiar with that?

Mr Robinson : Yes.

Senator REYNOLDS: Could you outline for the committee what you see as the enhancements to be offered or available to the training package, and what benefits those will be to the sector?

Mr Robinson : In that review, which was released at the end of 2013, we have done a lot of work with the sector. There has been a revision of the training package, which included picking up our recommendations about specifying the workshop placements that were needed for clinical practice and the like. As I said, some new standards on assessment have been brought in across the board, and a number of other things that we have recommended have been followed up on.

Senator REYNOLDS: What do you see as the outcomes for the sector itself? What are the tangible benefits that you see that they will offer?

Mr Robinson : We are finding fewer people that are noncompliant in that sector than we did when we did that review.

Senator REYNOLDS: In aged care?

Mr Robinson : In aged care. We have continued to follow on, looking closely at aged-care qualifications since that review, and there have been some improvements.

Senator REYNOLDS: Thank you very much. That was very instructive.

CHAIR: Before we go to our meal break, those departmental officials involved in higher education can head on home. Thank you very much for what has been a long day. We will return after the break with outcome 1.

Pr oceedings suspended from 20:45 to 21:00

CHAIR: Let's reconvene. We are on outcome 1.

Senator Birmingham: Is it likely that skills and early childhood will face further questions?

CHAIR: Yes, I would suggest so. It is only higher education that is no longer required.

Senator LINES: We pre-empted this question through the secretariat, so hopefully the department cannot provide us with the number of families in each electorate receiving the CCB and CCR.

Dr Bruniges : Yes, I have that here for you.

Senator LINES: Thank you very much. Do you want to just table that?

Dr Bruniges : Yes, I will.

Senator LINES: We have had a number of releases from the Abbott Turnbull government talking about the cost of child care. On 2 February 2014, then Minister Ley put out a release talking about the importance of fee relief for parents. Mr Morrison on 26 February 2015 wanted to make the point, 'We need to ensure that the measures that we are engaged in are anti-inflammatory, do not drive up the costs' et cetera. Even the Prime Minister on 23 November 2015 and 4 February 2016 talks about cost, particularly affordability. If affordability is so important, why has the package been pushed back? What has changed?

Senator Birmingham: Firstly, I would say that we are pleased that, under our management, affordability has improved to the extent that the rate of price increases has slowed significantly compared with what was occurring under the previous government—increases, I think, are closer to three per cent under our government and were about seven per cent under your government. In terms of the package itself, as we have already canvassed tonight and have canvassed on a few occasions, the government was clear that it needed to fund and pay for the childcare reforms that we have proposed. Unfortunately, the numbers were not in the parliament to get the savings measures through in time for the successful implementation of the childcare reforms at the start date that was originally proposed.

Senator LINES: What is the out-of-pocket cost to parents from the government's decision to delay the jobs for families package?

Senator Birmingham: That would depend on the circumstances of the parent.

Senator LINES: Ms Wilson, do you have any figures on that?

Ms J Wilson : As the minister said, that would depend on the circumstances of the parent, the price of care, the number of kids, the age of children—a whole range of different factors.

Senator LINES: What costs for parents do you have in regard to the delay to the jobs for families package?

Senator Birmingham: Again, it depends on the circumstances of individual families.

Senator LINES: Does that mean you do not have any costs.

Senator Birmingham: That means that there is a whole range of hypothetical scenarios which—

Senator LINES: Perhaps the department can give us some of those hypothetical scenarios for what the costs will be for families.

Senator Birmingham: No. The department is not really in the business of giving hypothetical scenarios.

Senator LINES: So you will not say what the cost is?

Senator Birmingham: We would dearly like to see our legislation pass as quickly as it can in the next parliament.

Senator LINES: With the decision to delay the subsidy commencement by a year, how many families do you expect will not access child care as a result?

Senator Birmingham: Every other time I have sat here and faced questioning from you, you have drawn a presumption that as a result of our childcare changes that we are proposing somehow families might not be accessing child care. Now you are seeking to say that, by not having the reforms, there may be people not accessing child care. I am not sure you can have it both ways.

Senator LINES: Minister, can you just answer the question. Do you have the number or not?

Senator Birmingham: I do not believe we expect that any families will necessarily not be accessing child care.

Senator LINES: So you are saying that, as a result of you pushing back the subsidy, families will continue to access child care. Is that your answer?

Senator Birmingham: The childcare benefit will continue for a further 12 months, the childcare rebate will continue for a further 12 months and will be indexed for that 12 months, and the other payments with long-winded acronyms will continue as well.

Senator LINES: Given the claims that the government made—in fact, the department also made this claim—about how many more people would be in work because of your families and jobs package, how many people will miss out on work because these reforms have been pushed back?

Senator Birmingham: I do not dispute the fact that it is unfortunate that these reforms have not been able to go ahead in the time line that was originally announced, because we do think there are clear benefits from them. That is why we proposed them in the first place; that is why we stand by them and will take them to the next election.

Senator LINES: So you concede families will miss out on work.

Senator Birmingham: No, I concede that, if the Turnbull government is re-elected, it will present its childcare reforms to the parliament, which will be of benefit to Australian families.

Senator LINES: Ms Wilson, are you able to point us to materials—which, I think, you referred to a couple of estimates ago—around the claims the government was making about more people being in work?

Ms J Wilson : Sorry, Senator—point you to materials. I am not sure of the question.

Senator LINES: The department had materials that it published saying how this childcare package would lead to more people being able to—

Senator Birmingham: We do certainly believe our childcare reforms will increase workforce participation.

Senator LINES: Would you mind letting me finish? I am asking the questions, okay? You have not heard the whole question.

Senator Birmingham: I was just trying to be helpful with an answer.

Senator LINES: No, you are not trying to be helpful. You are just trying to be too clever by half.

Ms J Wilson : I am just trying to recall the discussion—I remember we had quite a long discussion. Are you talking about the research we did with ORIMA about the workforce participation?

Senator LINES: You certainly made the claim there would be increased workforce participation.

Ms J Wilson : That is right. We engaged ORIMA Research to do both qualitative and quantitative work, and out of that we got the information around the workforce participation, which we have talked to you about previously.

Senator LINES: Just flesh out what that research said.

Ms J Wilson : The qualitative research we undertook in April 2015 investigated potential impacts on workforce participation and found about 24 per cent of respondents with children under 12 would be encouraged to increase their workforce participation as a result of the subsidy changes.

Senator LINES: So one assumes, then, that 24 per cent of people will now not do that.

Senator Birmingham: I do not—

Senator LINES: Minister, you are on the public record—

Senator Birmingham: Senator Lines, you just made an assumption and I would like to deal with your—

Senator LINES: No, I did not. I just quoted Ms Wilson saying your government made the claim that 24 per cent—

Senator Birmingham: Senator Lines, your statement started with, 'So one would assume.'

Senator LINES: Twenty four per cent is your claim.

Senator Birmingham: We would stand by that modelling for when the proposal is implemented. I do not think the modelling suggests that that is an instantaneous effect by any means; it is, in effect, achieved over a period of time. We stand by—

Senator LINES: Will it be achieved over the next year without the subsidy?

Senator Birmingham: It will be achieved under our policy, which we hope and plan to have implemented. We stand by our policy. We have no idea what your policy is.

Senator LINES: So, if you are returned to government, that 24 per cent will not start in the upcoming financial year because you have delayed the start of the package.

Senator Birmingham: Senator Lines, we wish that you had cooperated with us to ensure the package could have started in the time frame proposed.

Senator LINES: Can you just answer the questions, please.

Senator Birmingham: As I said, is it regrettable that some of the benefits from this package will be delayed by 12 months? Yes, it is regrettable that you stood in the way of those benefits being realised 12 months sooner.

Senator LINES: In fact, referring to the study that you just outlined, Ms Wilson, and the research you undertook, Mr Morrison said on 10 May:

Based on 2011 Census data, this would translate to around 240,000 families being encouraged to increase their involvement in paid employment.

If you delay the package, that is 240,000 people in the upcoming year who will not increase their workforce participation. This is your workforce study.

Senator Birmingham: Yes, Senator, and it is 240,000 people who, right now, you are not committed at all to having increase their workforce participation.

Senator LINES: We are not talking about Labor here. If we are the government, then you can question us.

Senator Birmingham: We unfortunately may have encountered a 12-month delay due to the parliamentary processes, but ours is a 12-month delay; yours is no policy at all.

Senator LINES: Minister, I believe you are on the public record in relation to out-of-pocket costs of parents, saying that parents would have been better off by about $30 a week under this jobs and families package. If you are saying they are $30 better off under your package, one assumes that the reverse—that they are $30 worse off—must also apply, because of your delay.

Senator Birmingham: It is regrettable that all the benefits from a package will not be realised in the time we would have hoped because we have not been able to succeed in getting the savings through the parliament to pay for the package. However, those benefits will still be realised in a range of different ways under a Turnbull government, because we stand by the policy and the reforms that are proposed, unlike the Labor Party, it seems.

Senator LINES: Do you recall mentioning the $30 out-of-pockets costs?

Senator Birmingham: I recall it vividly and expressly and, as I said, I am confident that many benefits will be realised to Australian families as a result of our childcare reforms when they are implemented. I hope and trust that the Labor Party will support us in that if we are re-elected.

Senator LINES: Ms Wilson, at estimates in the past we have talked about the new IT system. We had quite an extensive discussion at the last estimates. How much does the department expect to save by delaying the IT system?

Ms J Wilson : There are no savings in the budget for the IT system. The money has been rephased to line up with the new implementation schedule.

Senator LINES: How much money has been rephased?

Ms J Wilson : Budget Paper No. 2, page 76, outlines $199.4 million over four years from 2016-17. It is not actually broken down by years because, as is normal with government IT processes, there is a requirement to take a second-pass business case to government which identifies the detail of the proposals and the time frame in which they would be delivered. Then government makes a decision to appropriate money in the years that match that proposal.

Senator Birmingham: The IT system is one of the critical reasons why, unfortunately, the delay has been necessitated, because of course we could not go and expend serious money on the IT system until legislation had passed the parliament. The failure to have the savings and reform measures pass the parliament meant that delays were creeping into that IT build process. Only this week one of the largest childcare providers in the country, in discussing the change, expressed their concern to me about whether or not it could have been implemented in a seamless way for parents, providers and government in the original time frame. It was the increasing risk profile around that that ultimately drove the government to the decision that had to be made.

Senator LINES: Ms Wilson, at the last Senate estimates I asked you a lot of questions about the IT system, because Labor was very concerned that not enough work had been done. In fact, when we asked you if the IT system would be ready on time, you assured us that it would be. Now we are hearing from the minister that there were some problems. At the last Senate estimates you did not draw this to our attention.

Senator Birmingham: Senator, do not misinterpret what I said. I said that because of the failure to pass the legislation, and because we were not going to expend large sums of money on the IT system without having legislation passed, a delay became required. Last estimates there was still hope that we might see the savings measures passed and the reform legislation passed. By the time it came to a budget decision, sadly, that was, clearly, not the case.

Senator LINES: Ms Wilson, at the last estimates you assured us that you were on track to operate that IT system from the 1 July start-up.

Ms J Wilson : The minister said that the world has—

Senator LINES: I am asking what you said, Ms Wilson. I am asking you to—

Ms J Wilson : I do not recall those exact words. I think I explained to you the processes which we were doing, which was an internal-to-government briefing of options that we had—

Senator LINES: At the last estimates you were confident that you would meet that start-up date. Mrs Pearce is nodding.

Senator Birmingham: If the legislation had passed in—

Senator LINES: Did you make reference to the legislation being passed?

Ms J Wilson : Yes. The IT system cannot be built until the final specifications are determined, and that requires legislation.

Senator LINES: But when we specifically asked you about if the legislation was not passed, you did not pass any comment about that.

Senator Birmingham: Did you specifically ask a question of that nature, Senator Lines?

Senator LINES: I ask the questions, Senator Birmingham.

Senator Birmingham: No, Senator Lines. You just sought to quote yourself without actually offering a quote. You said, 'When I specifically asked if the legislation was not passed, would the IT system be built?' I doubt very much you did ask that question, Senator.

Senator LINES: Are you accusing me of lying, Minister Birmingham? I would be very careful, if I were you. We had a very long and extensive discussion about the IT system, and we did talk about the legislation. Let's be very clear here: your government has never even brought it to the parliament—it has certainly never been to the Senate—so how would you know whether it would be passed or not? We raised those issues.

Senator Birmingham: I think you might discover that you were part of a lengthy Senate committee on the legislation. But, that aside—

Senator LINES: Well, if you read our ABCC report you would see that we said we would not vote for that too, but you still brought that to the parliament. So, you cannot have it both ways.

CHAIR: Okay. Let's go on.

Senator LINES: How much did childcare fees increase between the December quarter 2013 and now?

Senator Birmingham: By several per cent less than they increased on average under your government.

Ms J Wilson : December quarter of 2013, did you say, Senator?

Senator LINES: Yes.

Ms J Wilson : I do not have the time frame you are referencing.

Senator LINES: What do you have?

Ms J Wilson : I have from June quarter 2014 to June quarter 2015. That was 5.4 per cent across all care types.

Senator LINES: That is a bit different to the three per cent.

Ms J Wilson : Sorry, Senator, can I just hold that for one minute. That was across long day care, and it was a 3.6 per cent increase across all care types.

Senator LINES: Okay. We are looking at long day care, so 5.4 per cent. How many children and families will hit the CCR in each year of the forward estimates? Can you just read it out for me, please.

Senator Birmingham: Just to be clear: only children or families in long day care?

Senator LINES: That is usually what we ask about.

Ms J Wilson : Families that hit the cap are all families—not broken down by care type.

Senator LINES: So, what have you got there? Just read those out.

Ms J Wilson : The number of families hitting the CCR cap—the $7½ thousand limit—in 2015-16 will be about 84,000.

Senator LINES: 2015-16?

Ms J Wilson : That is right.

Senator LINES: Across the forward estimates?

Ms J Wilson : I have 2016-17, but I do not have beyond that—108,000 in 2016-17.

Senator LINES: So, why don't you have beyond that?

Ms J Wilson : I just do not have it in the briefing I have in front of me.

Senator LINES: That is extraordinary that you would only bring half of the forward estimates. Can someone in the room get it.

Ms J Wilson : I can see whether someone else has that information, but I certainly do not have it in the brief I have in front of me.

Senator LINES: We ask you this nearly every estimates. I am really surprised that you have only two years worth of figures.

Ms J Wilson : The reason we do not have the numbers hitting the cap in 2017-18 was that was the time frame for the introduction of the new childcare subsidy and the cap was changing, as you know, so there was not going to be a cap for families under $185,000, and the cap was increasing for families above that to $10,000.

Senator Birmingham: The cap in the additional year will be indexed for the first time since your government's last budget imposed a cap.

Senator LINES: Can you outline each component of the childcare services support line item on page 39 of the PBS and state expenditure on each one over the forward estimates.

Ms J Wilson : The Inclusion Support Program, do you want me to read—

Senator LINES: The support line items on page 39.

Ms J Wilson : That is right but there are about seven or eight things that make that up.

Senator LINES: Yes, and we want to know the expenditure on each one over the forward estimates.

Ms J Wilson : If I start with inclusion support: in 2016-17, it is $127,116,000; in 2017-18 it is $131,176,000; in 2018-19, it is $138,296,000; in 2019-20, it is about the same, $138,296,000.

CHAIR: What is the percentage of the funding increase of the item?

Ms J Wilson : Of the inclusion support program? Actually that is a very good news story because there is a 25 per cent increase in that program to assist integration of children with a disability and children from non-English-speaking backgrounds and refugee communities into child care so it is a really good news story that is kicking off from 1 July this year.

CHAIR: So it is a 25 per cent increase?

Ms J Wilson : That is right.

CHAIR: That is fantastic work.

Senator Birmingham: Importantly the increase and changes to that program were not deferred and do apply as exactly as scheduled on 1 July this year.

Senator LINES: So how many families will receive CCR only in each of the next two years?

Senator Birmingham: I think Ms Wilson was still answering your previous question. She only got through the first.

Senator LINES: Well then stop interrupting.

CHAIR: I apologise, that is my fault.

Ms J Wilson : The Community Child Care Fund is 10,785 in 2016-17; 10,785 in 2017-18; 124282 in 2018-19; and 125,346 in 2019-20. Then I have the additional childcare subsidy. There is nothing in 2016-17 or 2017-18 for that with the new scheme kicking in from 1 July 18. There is 81209 in 2018-19 and 87953 in 2019-20.

Then we have the Community Support Program, which is the current range for supporting a whole range of educators and providing support services. It has funding for the next two years: 134706 in 2016-17; and 134706 in 2017-18. And in 2018-19, it is replaced by things like the Community Child Care Fund and the additional child care subsidy and the child care subsidy.

Senator LINES: So those three elements?

Ms J Wilson : That is right. Then we have got the current Inclusion and Professional Support Program, which has about $31,000 in 2016-17 when it is wrapping up the old new program and I read you the lines for the new program at the top. Then we have quality support, which is 6992 in 2016-17; 999 in 2017-18; 8010 in 2018-19; and 8122 in 2019-20.

Senator LINES: So what is the quality support?

Ms J Wilson : I will see if I have got someone who can answer that question. We have a range of money we use to provide support for quality in terms of services but we also provide a contribution to ACECQA for its regulatory responsibilities. We make a contribution and each of the states and territories make a contribution. We pay about half and the states split the difference between them so that is largely the component for our contribution to ACECQA.

Senator LINES: What is the essential component?

Ms J Wilson : I do not have that information with me on this spreadsheet but I can take it on notice.

Senator LINES: The rest of the funds which are not for ACECQA, what are they for exactly?

Mr Palmer : We would have to take that on notice.

Ms J Wilson : I will have to get the breakdowns.

Senator LINES: So nobody knows?

Ms J Wilson : We fund a range of programs to improve quality.

Senator LINES: Such as?

Ms J Wilson : If you think about it, there is a program called RIPD, which is for Indigenous communities to improve teaching quality and program delivery quality. So there is a range of projects we fund, to a range of different organisations. That one we fund Queensland Department of Education to develop tools to improve quality and service delivery.

Senator LINES: That is the RIPD program.

Ms J Wilson : Yes.

Senator LINES: And what else?

Ms J Wilson : That is 'Remote Indigenous Project Delivery'.

Senator LINES: What were some of the others?

Ms J Wilson : They are the ones I can think of at the moment. The bulk of the line item would be a ACECQA funding.

Senator LINES: But you cannot give me that breakdown?

Ms J Wilson : I do not have that with me.

Senator LINES: So how many families will receive CCR only in each of the next two years?

Ms J Wilson : Sorry, how many families will receive CCR?

Mrs Pearce : For CCR only: for 2016-17, it is 371,000; and for 2017-18, it is 391,000.

Senator LINES: On page 40 to 42 of the PBS, the department has not been able to provide targets that the number of families to receive you CCB or CCR in 2017-18. Why is that?

Ms J Wilson : It says basically the targets will be similar to the 2016-17 in the text.

Senator LINES: But why can you not provide the information, the dollars?

Ms J Wilson : It is not the dollars; it is the number of families receiving CCR and CCB and all that reference is meant to say is it will be this similar to the numbers of 2016-17, which are stated in the column above.

Senator LINES: So why can't you provide the information? The dollars?

Ms J Wilson : It is not the dollars; it is the number of families receiving CCR and CCB.

Senator LINES: The numbers, sorry.

Ms J Wilson : I think all that reference is meant to say is that it will be similar to the numbers in 2016-17, which are stated in the column above.

Senator LINES: So why can't you provide the numbers?

Senator Birmingham: They are similar to what is in the column above.

Senator LINES: Why didn't you just repeat the numbers?

Senator Birmingham: It is not actually uncommon, if you look through the PBS, to see that that approach is taken in a number of instances. That is just to save space.

Senator LINES: Why wouldn't you have just put the numbers there?

Senator Birmingham: Sorry, Senator?

Senator LINES: Ms Wilson, why wouldn't you have just put the numbers there?

Ms J Wilson : Each of the rows in the column above are specific for a year. That one you are referring to is about '2017-18 and beyond', so it is not just about that year. This is a new finance format for PBSs, so there is detail about the first two years and, then, a broader statement for beyond that.

Senator LINES: Is part of the problem because the decision to delay the childcare changes was made with very little notice?

Ms J Wilson : As I said, that is the format for the new way of PBSs.

Senator Birmingham: There are a number of other instances where it is just referenced as per the previous year and so on, Senator Lines. It is not unusual to refer to the column above.

Senator LINES: Why is the government delaying the childcare changes that were the centrepiece of last year's budget?

Senator Birmingham: Senator, as I think I have outlined once or twice tonight, the government's decision to delay was, unfortunately, taken because the savings required for this reform had not passed the parliament. The risk profile, in terms of the successful implementation of the reform for families, providers and government, was heightened by the prospect that legislation would not be possible to be passed until late this year at the earliest.

Senator LINES: So if the reforms were urgent last year, what has changed to mean they are less urgent this year?

Senator Birmingham: I wish they had been implemented on time because I wish that the savings measures required for their implementation had passed parliament so that they could have been implemented on time.

Senator LINES: I am talking about your reforms.

Senator Birmingham: Yes, the two are linked. I want the reforms in place as quickly as possible, but I also want to make sure that their implementation is a success. It would, obviously, be a terrible situation if providers were not ready and were not equipped with the right support to implement the new model, and if families did not understand the new model appropriately and were not ready for it. Unfortunately, because the savings measures had not passed the parliament, the legislation for the reforms had therefore not passed the parliament and that risk profile was heightened. That is why it was necessary to adopt the 12-month delay and therefore have confidence that all areas of implementation can be undertaken in as seamless a way as possible.

Senator LINES: Minister, can you rule out dumping the package if the FTB savings do not pass the parliament?

Senator Birmingham: It is absolutely the government's intention to proceed with the reforms and to see that they are paid for.

Senator LINES: If the FTB savings do not pass the parliament, will you dump the package?

Senator Birmingham: I am not counting on seeing the FTB savings not passing the parliament. I am intending for the savings to be found and realised and for these reforms to be delivered upon. These are the only childcare reforms—

Senator LINES: Which savings? Are these new savings?

Senator Birmingham: No, they are not new savings. These are the only reforms to child care that any party is offering.

Senator LINES: It is a bit strange, Minister, to try to blame Labor for your current dilemma. When I put to you, 'If the FTB savings do not pass, will you dump the childcare package?' you are very firm that you will get your package up with your savings.

Senator Birmingham: I am very optimistic about the capacity of the next Senate to function better than this Senate has done.

Senator LINES: So it is optimism at this point.

Senator Birmingham: Optimism and determination. You can put your descriptor on it, if you like.

Senator LINES: I am quoting what you said.

Senator Birmingham: I am both optimistic and determined to see these childcare reforms implemented in the interests of Australian families.

Senator LINES: It is ironic. I started the questions by asking you how come, if the reforms were urgent last year, they are less urgent this year. You, then, gave this longwinded answer about how it was Labor's fault. Now, I am saying to you: if you do not get your FTB changes through the Senate, will you dump your package? You are now saying no.

Senator Birmingham: I am happy to share the Labor Party's blame with the Greens and Senate crossbench as well.

Senator LINES: It has nothing to do with the Labor Party. This is your package. You created the urgency around it, and you did not even present it to the Senate.

Senator Birmingham: No, Senator—

Senator LINES: You did present it to the Senate, did you?

Senator Birmingham: We did not create the urgency around it. We brought forward, after careful consideration and consultation, sensible reforms to child care that were fully funded by savings, and we are determined to see savings realised so our reforms can be implemented.

Senator LINES: If they are fully funded by savings, if the FTB does not pass the Senate, I can only conclude that you will dump the package.

Senator Birmingham: We are determined to find savings to ensure that the reforms are implemented.

Senator LINES: New savings from somewhere else?

Senator Birmingham: We have savings proposals. If there is an election in coming weeks, as is widely anticipated and as is the reason for us sitting here at this time on a Friday night, we will go to that election with our reform proposal for child care—paid for, as we propose for it to be paid—and seek a mandate for those reforms.

Senator LINES: Through the FTB. Is that what you are saying?

Senator Birmingham: They are the savings measures we have spoken of before.

Senator LINES: Right. If they do not get through that does mean you will dump the package.

Senator Birmingham: That is a hypothetical question. We are determined to see savings being realised.

CHAIR: It is a hypothetical and the minister has been asked this several times. In the interests of time, and I know people want to get to school—

Senator LINES: It is up to me to ask the question as much as I want to.

CHAIR: You can, but I thought school funding might have been important too.

CHAIR: You created urgency around child care. It is the centrepiece of your budget and then—poof—it does not even get presented in the Senate.

Senator Birmingham: You are welcome to go to this election without a childcare policy. We are going to this election with childcare reforms, and we are determined to see them implemented. It is regrettable that the parliament was not more cooperative, in this parliament, to see the savings realised that were required for them.

Senator LINES: What do you have to say to parents who will miss out on your promised increase in childcare support because you delayed these reforms?

Senator Birmingham: Vote for the coalition because, that way, you can be guaranteed they will be implemented in the next parliament.

Senator LINES: How can you guarantee that? You did not even present the bill to the Senate.

Senator Birmingham: We did bring the bill to the Senate. It was considered by a Senate committee. We also were clear that savings—

Senator LINES: How many other Senate committees—the majority report supported it.

CHAIR: On that point, Minister, and the report that was presented, did the Labor Party recommend the bill be passed?

Senator Birmingham: The Labor Party's position was unclear, from memory of the comments they made. They certainly wanted or suggested a whole bunch of changes that would have increased the cost of the reform further. What was clear, all along, was that the Labor Party, Greens and crossbench senators stood in the way of the savings for the legislation. I have it now. It says:

Labor Senators believe that the additional investment is poorly targeted to achieve policy outcomes.

Senator LINES: I am not denying that we did not agree with your report.

Senator Birmingham: And:

The Government simply has not convinced Labor senators of this committee of the policy merits—

Senator LINES: That is not the point. There have been a lot of reports we have a not agreed with. In fact, I do not think we have had a majority report.

Senator Birmingham: So we can be confident, in this election, that you will not suddenly decide to adopt our policy and that the reforms you have spent all night asking the reasons for their delay, you will never implement.

CHAIR: That is right.

Senator Birmingham: You will never implement those reforms.

Senator LINES: We have—as is our right—written a lot of minority reports that do not support the government's agenda. Never, in the past, has it stopped the government from having the courage to put the bill into the Senate. On this occasion, you delayed the reforms because you failed to present the bill to have us vote on it.

Senator Birmingham: We have always had a finite amount of time in the Senate and we prioritise based on what we think there is a chance of passing at times. Unfortunately, it was always clear that you, the Greens and the crossbenchers were not about to pass the savings measures. What also seems to be implied in your comments in this Senate report is that you will go to the election standing against these reforms. Australians will know they will get improvements to child care under the coalition, as detailed in our policy, from 2018, and presumably nothing but what is currently there under the Labor Party.

Senator LINES: There has not been one matter in education which has been referred to the Senate legislation committee that Labor has agreed with. That has never before stopped you from presenting your legislation for voting on in the Senate. Those are the facts.

Senator BIRMINGHAM: I doubt that is actually the case.

Senator LINES: Really! How would you know? I have participated in the legislation inquiries and I am saying to you that we have presented minority report after minority report. There has not been one occasion when we have ever agreed with the majority, yet that has not stopped you putting your legislation in the Senate. So it is a bit false of you to sit there and say, 'Oh, Labor wrote a minority report, so therefore we didn't put our legislation up for a vote.' Please!

Senator BIRMINGHAM: Actually, as you well know, there are two sets of legislation. There is the savings measures and there is the reform measures. Under our government we pay for our reforms, and the savings measures needed to be passed before the reform measures could come to a vote.

CHAIR: I note that the department recently issued the June quarter data. What was the average cost increase under the previous government and how much was that in each year?

Ms J Wilson : The average fee increase from June 2008 to June 2013 was 7.8 per cent. The last quarter data we have, which is the June quarter, as you have indicated, indicates that fees grew by 3.6 per cent, which is the number I said before.

CHAIR: Yes, I realise that that was Senator Lines's question. So seven per cent under the previous government and 3.6 per cent under the current.

Ms J Wilson : In the June quarter 2015.

CHAIR: Yes, thank you.

Senator LINES: Can the department update us as to the assessment of how many families will be better or worse off in relation to the activity test, given that the package has been pushed back?

Senator Birmingham: All the elements of the package have been indexed, as we proposed, so I have not asked the department to undertake any revised modelling or the like. There is no particular need to, given the indexation parameters.

Senator LINES: Ms Wilson, are you able to update the information that was published in the minister's media release of June 30 about the activity test?

Ms J Wilson : As the minister said, the delay costings include adjustment to all the fee caps and all the income thresholds and the annual income caps. So all the 1155 will be indexed in 2018-19, and all those other rates we have talked about before will all be indexed consistent with what the legislation in front of parliament said would happen anyway.

Senator LINES: At the last estimates, you indicated that 37,000 families would be worse off as a result of the activity test. It is not clear whether these families were above or below the $65,710.

Ms J Wilson : I think we gave you that detail in that question on notice we provided to you.

Senator LINES: Could you go over it again if you have it there.

Ms J Wilson : It is Senate question on notice 142. In relation to that—

Senator LINES: Is this from the Senate inquiry?

Ms J Wilson : No, this is from last Senate estimates. You asked a lot of detailed questions—

Senator LINES: Yes, I did.

Ms J Wilson : I might get Ms Mitchell to take us through that.

Ms G Mitchell : There was a table attached to that question on notice where we talked about the reasons why families might be better off or why they might receive less of a subsidy. For those who might be impacted by the activity test on an income of $65,710 or less, we anticipate around 28,000 families will be impacted on.

Senator Birmingham: These are families that are not meeting the activity test requirement to work, train, study or volunteer around four hours per week.

Senator LINES: In response to the Senate inquiry into the jobs for families legislation you provided a breakdown which had a table. It had an activity test and allowed hours per fortnight. Under the figure of zero you had three per cent. Then under the allowed hours of 24 you had 5.3 per cent. Under the allowed hours of 36 you had 3.6 per cent. Are you familiar with that table?

Ms J Wilson : No. Are you talking about our submission to the Senate inquiry? I just want to clarify what you are talking about.

Senator LINES: It may have been in your submission. You provided that table.

Ms J Wilson : We are just trying to locate it.

Senator LINES: Does that table sound familiar to you?

Ms J Wilson : It does not sound familiar, no. The table we were reading off was in response to the question you asked—

Senator LINES: I appreciate that.

Ms J Wilson : not at the Senate inquiry but at the last estimates.

Senator LINES: I was talking about the Senate inquiry.

Ms G Mitchell : There is certainly no table of that kind in the submission.

Senator LINES: I will just check to see if it was a formal submission. It is your table, but it is not one that readily comes to mind?

Ms J Wilson : No.

Ms G Mitchell : No.

Senator LINES: You certainly provided it to the Senate inquiry. I wanted to ask you some questions about it. Maybe I will move on and you can have a look for that table. It has the activity test set out for zero hours, 24 hours, 36 hours, 72 hours and 100 hours. Then on the corresponding piece of that under zero hours it has three per cent of families. Under 24 hours it has 5.3 per cent of families. Under 36 hours it has 3.6 per cent of families. Under 72 hours it has 21.2 per cent of families. Under 100 hours it has 66.9 per cent.

Ms G Mitchell : Was that in response to one of our QONs from the Senate inquiry?

Senator LINES: I think it was. That is what I suspect.

Ms J Wilson : We are just checking, but it is not one we are—

CHAIR: We might go on with other questions.

Senator LINES: Yes. I am just making sure they understand what I am asking. Regarding the activity test exemption, what is the government proposing is the definition of 'volunteering'?

Ms J Wilson : We are happy to take you through that. We undertook some consultations in three states and territories last year. We tested this definition, and there was quite strong support for it. I will get Ms Mitchell to outline it for you.

Ms G Mitchell : The proposed definition is that it is when an individual undertakes unpaid voluntary work to improve work skills or employment prospects or for community engagement. To be recognised, voluntary work can be undertaken at a registered or recognised volunteer organisation or other charitable or community organisation which may include churches, sporting clubs or schools.

Senator LINES: What do you mean by 'recognised'?

Ms G Mitchell : It would be an organisation that was recognised as one that used volunteers.

Senator LINES: If it had not used volunteers in the past, does that rule it out?

Ms G Mitchell : There are recognised voluntary organisations such as The Smith Family, the Red Cross and so on. It would be those kinds of organisations or it could be other community organisations that are not necessarily recognised formally—

Senator LINES: By that meaning, they do not use volunteers.

Ms G Mitchell : No, they are not recognised formally as a volunteer organisation like the Red Cross but it could be a school or a church—

CHAIR: Like a football or netball club?

Ms G Mitchell : That is correct.

Senator LINES: I think that the football and netball club are recognised. What else might fall into 'unrecognised'?

Senator Birmingham: I think that if we are talking 'formalised' you would expect that they might hold a DGR status, for example. Football or netball clubs or schools in general—and there are some variances there for schools, but government schools, for example—do not tend to hold DGR status.

Senator LINES: Will it include volunteering at early learning centres?

Ms G Mitchell : Yes, that is our proposal.

Senator LINES: So, reading to children?

Ms G Mitchell : Yes, that is correct.

Senator LINES: Working in the school tuckshop?

Ms G Mitchell : That is under consideration as well.

Senator LINES: What else is under consideration?

Ms G Mitchell : It would be any voluntary work that was undertaken in one of those organisations that I mentioned—a community organisation, a school, a church.

Senator LINES: By 'under consideration' there is not a separate list?

Ms G Mitchell : No.

Senator LINES: A confirmed list and an under consideration list.

Ms G Mitchell : No.

Ms J Wilson : One of the things that we are looking at is parental engagement through the volunteering aspects. Interestingly, one of the things that people said last Friday was: 'Do you do it just during that hours of eight till five and anything outside of those hours like P&C is not considered volunteering?' They raised a number of interesting issues that we have now got to think and talk further about and talk to other people about.

Senator LINES: If that definition was changed or altered in any way so that a larger or smaller number of children and families might have access to subsidised child care, would this require the costings of the reforms to be altered?

Ms J Wilson : I think that we have answered this before in a question on notice. The basic range of activities allowed for substitution between work, training, study and a whole range of other activities—this would just shift people between those areas rather than increase a particular area. I think that the detailed response in one of the questions on notice would have provided it to you.

Senator LINES: If there was a light touch to the term 'volunteering', would the package cost more than it does now?

Senator Birmingham: I think that I have frequently described that it would be a light touch to the term 'volunteering.' That is exactly the type of definition that you just heard before.

Senator LINES: Has the department costed any alternative definitions of 'volunteering' other than the ones that Ms Mitchell described?

Ms G Mitchell : No, that is the only definition that is under consideration.

Senator LINES: How will casual workers be treated under the activity test? Will they be asked to average their hours or what will it be?

Ms J Wilson : We have talked to you about looking at providing people with variable hours of workforce participation, providing a three-month estimation process. Ms Mitchell can talk to that.

Ms G Mitchell : I think we discussed this at the Senate inquiry as well. The intention is that a family who had those irregular or casual hours would estimate their average hours of activity over a three-month period. Their hours might go up and down in individual weeks across that three-month period, but it is the estimate for the entire three-month period that would then determine which step of the activity test they were entitled to.

Senator LINES: What happens if they come up short?

Ms G Mitchell : Because everything is reconciled at the end of a financial year, if they came up short in one three-month period, it may well balance itself out in the next three-month period, for example. As we also discussed at the Senate inquiry, as we do now with CCB where we withhold a certain percentage of a parent's CCB payment, we are proposing to withhold a certain percentage of a parent's CCS payment to account for any reconciliation issues at the end of the financial year.

Senator LINES: You withhold what?

Ms G Mitchell : At the moment we withhold 15 per cent of the parents' CCB entitlement so that at the end of the financial year when the reconciliation is done the family does not fall into a debt situation. We have worked with DHS to see what amount would be appropriate in moving to a single payment. They have recommended 10 per cent as an appropriate amount of the new subsidy.

Senator LINES: I want to talk about the legislative out years customised model of child care, which I think you called 'locmocc'.

Ms J Wilson : I did; I should probably never have said that.

Senator LINES: It is a bit easier to say than the whole lot. What does locmocc predict childcare fee increases to be over each year of the forward estimates?

Ms J Wilson : I think we have given this to you before on a QON. Let me see if I have the information with me.

Senator LINES: While you are looking for that, can the department confirm that the cost of model for the childcare subsidy only includes first-round effects? Can you also advise if any modelling of second-round effects has been undertaken?

Ms J Wilson : We are only allowed to use first-round effects for costing purposes in an agreement with Finance.

Senator LINES: Do you do second-round effects?

Ms J Wilson : They are not permissible for costings.

Senator LINES: From Treasury?

Ms J Wilson : No, Finance.

Senator LINES: Are you still looking for the locmocc data?

Ms J Wilson : I do not have them updated to reflect all the parameter changes that happened in the budget this week.

Senator LINES: You don't have them?

Ms J Wilson : They update every time the budget comes in with a forecast that Finance agrees to. I do not have them with the new numbers with me.

Senator LINES: Thinking about preschool, under the universal access national partnership, can you provide the latest data on enrolment rates?

Senator LINES: I am after enrolment rates, attendance rates and access rates. Could you read it out and give a state-by-state breakdown as well?

Ms Gordon : The most recent data available for assessed performance under the universal access national partnership is the assessed performance against the 2014 year. This draws on data from the ABS preschool collection. Taken together with the ABS population rates, it gives you the rates of attendance for children in the year before formal schooling. For children enrolled, it is the number of children aged four and five years attending preschool who were enrolled in the year before full-time schooling in a quality early childhood program divided by the estimated number of children who are four years old in that same year. Did you want the rates by state?

Senator LINES: Yes, please.

Ms Gordon : For New South Wales, it is 85.4 per cent; Victoria is 100 per cent; Queensland, 100 per cent; South Australia, 100 per cent; WA, 100 per cent; Tasmania, 100 per cent; Northern Territory, 94.2 per cent; and the ACT, 100 per cent. Overall in Australia, it is 100 per cent.

Senator LINES: Is that enrolment rate?

Ms Gordon : That is enrolment. To explain that a little bit further, a number of those are 100 per cent. Because the data is taken from two different sources to give you a rate, it means that a number of those numbers are over 100 and they are rounded down to 100, because you are taking actual enrolment that has been reported by preschool delivery services and it is divided by the estimated population. So the actual enrolments include both four-year-olds and five-year-olds, and then it is divided by the number of four-year-olds.

Senator LINES: And attendance rates?

Ms Gordon : In terms of 2014, attendance rates are: New South Wales, 96.5; Victoria, 95; Queensland, 96.4; South Australia, 98.5; WA, 96.3; Tasmania, 98.8; Northern Territory, 90.9; ACT, 97.5; and the Australian average is 96.2.

Senator LINES: What about access rates?

Ms Gordon : Under the national partnership agreement, the number of children enrolled is the measure for access. The two performance indicators under the national partnership are, firstly, the number of children enrolled and, secondly, of those enrolled, the number of children enrolled in a program for more than 600 hours a year.

Senator LINES: What are the figures for the access rates?

Ms Gordon : The access is measured as the enrolment—the number of children.

Senator LINES: How many are enrolled and attend a program for more than 600 hours per year, by state, if you have that?

Ms Gordon : Are you after the numbers that are enrolled rather than the rate?

Senator LINES: That attend more than 600 hours per year.

Ms Gordon : The attendance is actually measured as the children that are enrolled in those programs that attend for at least one hour of that program.

Senator LINES: One hour per week?

Ms Gordon : That is correct. If they have attended for one hour of the program then they are counted as attending.

Senator LINES: One hour per week, not one hour a year?

Ms Gordon : No. That is correct.

Senator LINES: Do you do any other analysis?

Ms Gordon : Under the national partnership agreement, the analysis is of the performance against the agreed performance indicators under the partnership, and that is what the states are assessed against.

Senator LINES: Can you tell us how many attend or are enrolled in 15 hours or more per week?

Ms Gordon : Those were the second figures that I gave you. Of those children that are enrolled in a preschool program, the number that are enrolled in a program for more than 15 hours a week, or the 600 hours a year. So that is the second of the performance indicators.

Senator LINES: That second line, so for New South Wales it was 96.5. That is the more than 15 hours.

Ms Gordon : That is correct—so, of those children enrolled in a preschool program, the proportion that are enrolled in a program for more than 15 hours a week.

Senator LINES: Do you have any other numbers?

Ms Gordon : In terms of the performance, under the national partnership there is the headline performance, which is all the children, and then there are sub-indicators against Indigenous and vulnerable.

Senator LINES: All the children?

Ms Gordon : Under the national partnership, the performance indicators are for all children, and then there are sub-indicators for vulnerable and disadvantaged and for Indigenous children.

Senator LINES: Is that the vulnerability index, or is this another measure?

Ms Gordon : The vulnerable and disadvantaged category is generally using the bottom quintile of SEIFA, with one exception—the ACT uses the AEDC to identify their vulnerable and disadvantaged.

Senator LINES: Ms Wilson, a final question, I think, about the Professional Support Coordinators program; is that you?

Ms J Wilson : Yes, it is.

Senator LINES: I am after the annual value of the Professional Support Coordinators program.

Ms Wilson : We are just getting the breakdown for you, Senator. Do you have another question, while we are looking for it, or can we take it on notice?

Senator LINES: No, I want you to try and find it, thanks.

Ms Wilson : Okay, we will have a look.

Mr Palmer : The amount for the Professional Support Coordinators is $15.137 million for the 2015-16 year.

Senator LINES: That is the yearly cost?

Mr Palmer : Yes.

Senator LINES: I want to talk about where we are up to with nannies. Can you give us the statistics on the uptake of the program—the numbers?

Mrs Pearce : Yes. I can give you figures as of today. We have 140 children and 60 families that are in the CCMS system—

Senator LINES: Registered in—

Mrs Pearce : Registered in our system for payment.

Senator LINES: These are nannies?

Mrs Pearce : No, these are children.

Senator LINES: Sorry, but the 60 families are using nannies?

Mrs Pearce : Yes. You are talking about the nanny program—

Senator LINES: No, the 140 children and 60 families.

Mrs Pearce : Yes, with 30 that are currently in a queue to go into the system.

Senator LINES: Thirty what?

Mrs Pearce : Thirty families—

Ms J Wilson : Thirty families who have been matched and a start date agreed. They just have not made it into the registered system yet.

Senator LINES: What are the fees being charged, on average?

Ms J Wilson : Thirty-five dollars, on average, nationally.

Senator LINES: A day?

Ms J Wilson : An hour.

Senator LINES: Thirty-five dollars an hour. What are the highs and lows of those? What is the highest being charged?

Mrs Pearce : I do not have those with me, but they are roughly around $35. I mean it would depend on the time of the day. Some of the providers have flat fees overnight and some of them have higher fees overnight, so it varies.

Senator LINES: What is the usage rate by families?

Mrs Pearce : I do not have a usage rate, at the moment. The numbers are still relatively small because we are, really, at the beginning of this project. It has taken quite some time for the providers to match families and nannies and to bed that process down, because it may be that a family has a range of different needs. There is a huge amount of variability, in terms of family needs. It is not a one-size-fits-all model, so it is—

Ms J Wilson : It is not full-time, though. It is not 50 hours a week. It was in the 20s of hours per week, the last time we had a look at it. But that is not dissimilar to when we talk about how many hours a week people put their kids in care in general. The average in the June quarter 2015 was 25 hours.

Senator LINES: At the Senate inquiry into the childcare leg in Feb you told us that the data reporting work for January to March 2016 for the nanny pilot was underway. Is that some of the work you just quoted from then?

Mrs Pearce : That is right.

Ms J Wilson : That is correct. We said we were waiting for the first quarter report—

Senator LINES: Yes, and it is finished?

Ms J Wilson : We have the first lot of information.

Senator LINES: So you have the January to March 2016 report?

Ms J Wilson : That is right.

Senator LINES: Has that data been reported?

Mrs Pearce : Reported where?

Senator LINES: Publicly reported.

Mrs Pearce : No, it is not a public report.

Senator LINES: Can you table a copy of the data for that period—January to March?

Ms J Wilson : We do not have a formal report. It is a contractual obligation, as we explained, for the providers to report to us. We were not planning to put that out in a formal report of any sort. It is just each service provider's requirement to report to us on how they are going.

Mrs Pearce : And it changes daily—the numbers of kids or families using the nanny pilot.

Senator Birmingham: This is a pilot program, and so within that there are plans for a proper and full evaluation.

Senator LINES: How many nannies are employed under the nanny trial?

Ms J Wilson : We do not have that information with us. It could be part of the reporting, but I do not have that information with me.

Senator LINES: If you have 140 children, one would presume there are not very many. Even if it is one nanny to one child, that is 140.

Ms J Wilson : There is a lot of work that service providers have had to do to bring on their own nannies, and that has been a big part of getting service providers to cover rural and remote areas as well. So I do not think you can assume what you just said. They could well have a lot of nannies on their books and they are still in the process of matching nannies to families.

Senator LINES: Yes, but I am asking about those employed. You have 140 children, so one assumes there are not many nannies.

Mrs Pearce : I was speaking to the providers two days ago and they were saying that they had a significant number of nannies on their books. They may not have actually employed them, but they are trying to match them to families. Once the matching process occurs and the care is provided, they would then be formally employed.

Senator LINES: Sure, but you only have another 30 families in the mix, waiting.

Mrs Pearce : But it changes every day.

Senator LINES: Yes, but they are not big numbers we are talking about.

Mrs Pearce : No, but comparatively I can recall some years ago we did a pilot project looking at other forms of care—like long day care, family day care and so forth—in terms of providing flexibility to parents. If you look at the figures for the same time in the first three months, in the family day care pilot we had 16 children—

Senator LINES: In the family day care pilot? What, 30 years ago?

Mrs Pearce : No, this was three years ago.

Ms J Wilson : It was 2013.

Mrs Pearce : It was 2013. In the long day care aspect of the same trial there were only nine children at that stage. One of the reasons we set this project up was that we were told by families at that time, and we learnt from that project, that families wanted someone in their own home, particularly if they were working overnight shifts, which many of the police and ambulance services were. They are the people we are really targeting.

Senator LINES: You talked about the difficulties you have had in regional and remote areas. So how many nannies are employed in regional or remote areas?

Mrs Pearce : I do not have that, but I know—

Senator LINES: What about families in regional or remote areas?

Mrs Pearce : It is a small percentage of those that we—

Senator LINES: Can you give us a state-by-state breakdown?

Mrs Pearce : I cannot. I do not have that.

Ms J Wilson : We provided a response to a QON on that. I do not know the number of it straight off the top of my head, but you asked for a breakdown by regional or metro, and we provided it to you in a QON after the last estimates.

Mrs Pearce : Of the families that applied, yes.

Senator LINES: What is the total number of hours claimed by all families under the trial?

Mrs Pearce : I do not have a total hours figure with me.

Senator LINES: But you have the figure?

Mrs Pearce : We may well have it in our system. We would have to do a search of the system to provide that.

Senator LINES: You said the average was 20 hours. Is it 20 hours by the number of families?

Ms J Wilson : No, I said 'in the 20s'. I did not say—

Senator LINES: No, I am not holding you to that. About 20.

Ms J Wilson : It was something like the early 20s.

Senator LINES: How many families registered for the program but did not engage a nanny at all in that first quarter?

Mrs Pearce : I think I mentioned that figure to you last time; there were 2,800, roughly.

Senator LINES: When do you think you will you meet your target of 4,000 children?

Mrs Pearce : We are hoping to meet the target of 3,000 children but, as I—

Senator LINES: I thought it was 4,000.

Mrs Pearce : It is 3,000 families—sorry. Yes, 3,000 families. As I said, whenever you set these types of projects up it takes time to actually do the set-up phase, get families on board and sort out all the administrative side of things. Consequently, you would not expect to have your largest number of families at this point in the project, but it is beginning to really ramp up now.

Senator LINES: So you are at 60 and your target is 3,000. When do you think you are going to meet that target?

Ms J Wilson : There has been a lot of enthusiasm from the announcement in the budget about the increasing subsidy, so people who previously had not committed are now emailing the team and asking to now be reconsidered based on the—

Senator LINES: Yes, you are a long way from 3,000.

Senator Birmingham: Sure, we are. As I said, this is a pilot. We have listened to feedback already, and we have made some changes to the operation of the pilot. For each and every single family who signs up, this is support for their circumstances and their child care that has never been available to them before.

CHAIR: Going back to the previous government's flexibility trials, did the anticipated number of families join the previous government's flexibility trial?

Ms J Wilson : No.

Mrs Pearce : No.

CHAIR: How many were anticipated to join those trials?

Mrs Pearce : There was a range of different trials but, to give you an example, there was one trial where they really only had a very tiny percentage—I think it was something like 16 as opposed to 100, which was their target. All of them had problems, and we have learnt from those trials and tried to adjust.

CHAIR: And ameliorate that in this particular pilot?

Ms J Wilson : Yes. I think that, at the end of the whole trial—which was an 18-month process—there were 500 families anticipated to participate, and only 300 families who ended up participating.

CHAIR: The nanny pilot program commenced in January 2016. We are now four months into the trial. At the six-month stage under the previous government, how many families had actually signed up for those flexibility trials?

Mrs Pearce : I do not actually have the figures for the six-month stage but, as I mentioned earlier, in terms of the family day care trial at the three month stage there were 16 children; there were not that many more at the six-month point. For the long day care one there were nine children, and so on. The really good thing about this project is—

CHAIR: But you learnt from that?

Mrs Pearce : Yes.

CHAIR: And you have taken those learnings into this program?

Mrs Pearce : Absolutely.

Ms J Wilson : Also, the Productivity Commission found that the biggest thing that families asked for was a nanny in their own home. That was the resounding comment from all parents who participated in the Productivity Commission.

CHAIR: I remember that.

Ms J Wilson : The government is trying to respond the request of parents—

CHAIR: Nurses, coppers—

Ms J Wilson : That is right. Shift workers.

CHAIR: single parents who are trying to manage the realities of life.

Ms J Wilson : That is right.

CHAIR: How will you manage the provider-led recruitment announced in this week's budget?

Mrs Pearce : First of all, all of the families that may not have responded will be contacted. As I mentioned to you, I think, last time I was here, there were about 400 families that were on a list who had not made the cut-off time but who were still interested. We are contacting those families and telling them about the new subsidy rates. I can tell you from my discussion with the providers that there is a huge amount of interest. We have opened up our hotline again and there has been a lot of interest via the hotline, and some of it from families that did not fit into those groups. Those groups will be attended to first and given the opportunity to go into the pilot with the new subsidy rates, and then we will move on to others who have expressed an interest since.

Ms J Wilson : I think one of the interesting points is that, when we did this in December last year, we did the service provider tender and the family tender at the same time. So they were happening in parallel. Doing service-provider-led recruitment means we have a bunch of people who actually know how the program works, who know how to target families with multiple children and who will benefit most, consistent with the guidelines—that was the way we recruited the last cohort. We can have a lot more active management of people who would actually fit—

CHAIR: On the ground who know their communities.

Ms J Wilson : That is exactly right.

CHAIR: It sounds like you are still learning—

Ms J Wilson : We are.

CHAIR: which is the whole point of a pilot. How much say will providers have on who is going to be accepted into the program?

Mrs Pearce : The department will have the final say on that.

CHAIR: So the department will be ensuring that we can have that assurance that those families—

Mrs Pearce : meet the criteria.

CHAIR: Absolutely. Well, thank you for that guarantee, Mrs Pearce. Are there any further questions for outcome 1? Go for it, Senator O'Neill.

Senator O'NEILL: Minister, last estimates Senator Dastyari asked you about comments made by the finance minister who said—and I am quoting the minister here—on Sky News on 2 February:

As with anything, if any minister wants to suggest changes that have a negative impact on the budget bottom line, they would have to find other areas in their portfolio to pay for it through offsetting savings in other areas of their portfolio.

When we were last here you confirmed that that was the case for you and your department in relation to any additional spending that you put forward, and you told the committee here—and this is exactly what you said:

That is a correct reflection of the budget operating rules.

After further questioning from Senator Dastyari, you said:

What Senator Cormann has said is a correct statement in terms of the budget operating rules. It is always up to the cabinet of the day to ultimately make its determinations in relation to funding decisions, but Senator Cormann correctly reflects the budget operating processes, which are that portfolio ministers who wish to bring forward spending proposals need to offset those spending proposals. That is part of the government's desire to try and rein in the deficit that we inherited and to get the nation's finances onto a more stable footing.

Minister, what cuts have you and the department made in this budget to offset the $1.2 billion that you say you are putting into schools to make up for the $30 billion cut that you are continuing to stand by?

Senator Birmingham: Firstly, I dispute the very last part of your statement—that there is any cut to school funding in the future which will grow each and every year into the future—but I will deal with the substance of your question. I am pleased that you highlighted, in one of the quotes you read out there, that it is always up to the cabinet of the day to make a decision on these matters. The cabinet and ERC in the budget process managed to find other offsets and savings measures that facilitated the decision that was taken in relation to schools funding.

Senator O'NEILL: So what are the offsets for the $1.2 billion in your portfolio?

Senator Birmingham: They did not relate to this portfolio. To be honest, I am not precisely aware of them. What I am aware of is that, right across the government, all of our additional spending commitments, such as the commitment in relation to schools funding, were offset by real savings in terms of reductions in other spending commitments whilst—

Senator O'NEILL: So you are telling me that your savings—

Senator Birmingham: Let me finish the answer, please.

Senator O'NEILL: Well, I have got the answer to the question.

Senator Birmingham: Whilst any revenue increases were put back into tax reductions within the government's budget.

Senator O'NEILL: For the rich people. That is right; I remember.

Senator Birmingham: No, Senator. You can play your class-warfare games over there if you want to.

Senator O'NEILL: It is not a game, Senator. We are talking about the education of a nation and we are talking about $1.2 billion that you found from somewhere and you have given as tax cuts—as you said—to the rich.

Senator Birmingham: Senator, I was not the one who made the snide comments.

CHAIR: The funds were found across government.

Senator O'NEILL: I heard the senator's answer, Chair. Is the budget saving of $1 billion a result of the 12-month delay of childcare reforms? Is that your offset?

Senator Birmingham: No, it was not.

Senator O'NEILL: Because the offset was not found in your department; is that what you are telling me?

Senator Birmingham: That is correct.

Senator O'NEILL: With regard to the delay in childcare assistance for families, none of that is related to the $1.2 billion that you have clawed back?

Senator Birmingham: No, it was not.

Senator O'NEILL: Are you telling me that you really do not know where your good friends in cabinet found $1.2 billion to give to you?

Senator Birmingham: The Expenditure Review Committee of cabinet, of which I am not a member, does undertake deliberations across every single portfolio area. We all go into the ERC, as individual cabinet ministers and other ministers outside of the cabinet, to make our bids for funding in parts of our portfolio, to discuss where savings might be able to be realised in our portfolio—that is all part of the normal budget procedure—and then, in the end, a final package in relation to the budget is, of course, presented and endorsed by the cabinet.

Senator O'NEILL: So you are telling me one thing now that is very different from what you said to Senator Dastyari, when you said:

… if any Minister wants to suggest changes that have a negative impact on the Budget bottom line, they would have to find other areas in their portfolio to pay for it—

and—

… portfolio ministers who wish to bring forward spending proposals need to offset those spending proposals—

and you implied within their own portfolio. Is that no longer the policy of the government—you are just finding money from anywhere?

Senator Birmingham: No, they remain the budget operating rules, but, as I said in one of the other quotes you gave at the outset, it is always up to the cabinet of the day to determine where exceptions to that may apply. Happily, in relation to schools policy, that is what occurred.

CHAIR: Congratulations, Minister.

Senator Birmingham: Thank you, Chair.

Senator O'NEILL: So the $1.2 billion that you have found to offset the $30 billion is an exception to the rule?

Senator Birmingham: The $1.2 billion that will ensure schools funding grows from around $16 billion in 2016 to $20.1 billion in 2020 was found through the budget process.

Senator O'NEILL: On Sunday, you released another glossy brochure—this time called Quality schools, quality outcomes. On page 14 of that document it says:

For the 2018 to 2020 school years, recurrent school funding will be indexed by an education specific indexation rate of 3.56 per cent, with an allowance for changes in enrolments.

How did you come up with that rate of indexation of 3.56 per cent?

Senator Birmingham: I am glad you asked, because Mr Cook will give a very comprehensive answer, I have no doubt, into how the 3.56 per cent is calculated.

Senator O'NEILL: Well, I do have quite a number of questions I would like to get through, Chair.

Senator Birmingham: I am sure he will be as quick as he can.

CHAIR: Yes, I have got questions too, Senator. If we want to wait, I will ask mine now if you want to—

Senator O'NEILL: No, I just want to make sure I do not end up with a 15-minute answer. If I can get a short answer, that would be helpful.

Senator Birmingham: Mr Cook would not do that, but I am sure it is detailed.

Mr Cook : It is using actual data. It is using what we call a wage cost index. We looked at what the general spend in education is, and about 75 per cent of that spend is usually on teacher wages. The index is made up of the education subgroup of the wage price index—75 per cent of the index is made up of that and 25 per cent of the index is made up of the education component of the consumer price index. We then looked at what that looked like over the last 12 months, the last two years and the last four years at both a simple moving average, which means we just take the actual data; and then what we call an exponential moving average, which is where you weight the data towards the later years, so that you do not have huge spikes in the data. We have averaged that, and we got the figure of 3.56 per cent.

Senator O'NEILL: Okay, so that is quite different from previous conversations we have had about CPI in this forum. The document goes on to say in relation to the temporary indexation rate of 3.56 per cent:

This measure reflects more accurately the growth in education costs by focusing on factors specifically related to the education sector—

as Mr Cook has just outlined. Minister, if the 3.56 per cent growth rate reflects more accurately the growth in education costs, what does an indexation rate of CPI, which is currently less than two per cent, reflect?

Senator Birmingham: We have made a policy change to the education-specific rate, which more accurately reflects the cost in education.

Senator O'NEILL: We have been saying that to you for some time, Senator Birmingham.

Senator Birmingham: At this point in time it probably generously reflects the likely future costs given that the current inflation rate is significantly below where it was for the period of time of the calculation that Mr Cook outlined.

Senator O'NEILL: In previous conversations with you in this forum, I have asked you on a number of occasions if you could guarantee what would happen. Would there be a fall in funding if the CPI rate went down? You were absolutely strident in your support that basic CPI was all that education needed and that that was fine, but you have changed your mind.

Senator Birmingham: We have a very good policy that ensures that, off a record funding base, funding grows each and every year into the future and grows and is indexed in a manner throughout the life of the budget that nobody could dispute was keeping up with costs—and likely, given where inflation has gone, will in fact be ahead of costs.

Senator O'NEILL: So nobody could dispute that. My next question is: according to the budget, school funding indexation reverts back to the CPI rate after 2020, as announced in the 2014 budget. Your own report recognises that CPI does not keep up with the growth in education costs, so why is it your policy after what you have just said to revert to the CPI indexation after three years?

Senator Birmingham: The policy decision was taken for the life of the budget forward estimates, and what happens in future budget forward estimates is a matter for future budgets.

Senator O'NEILL: Okay, so this is the old four-year/10-year trick that we are starting to see in a few places? Well, maybe even shorter; the 2020s are not that far away.

Senator Birmingham: 2020 is a defined year in the budget forward estimates. It is four years away, actually.

Senator O'NEILL: Yes. We have got problems with these rubbery figures.

Senator Birmingham: There is nothing rubbery. I gave the exact precise answer there. The budget decision was taken—

Senator O'NEILL: You have changed your policy from CPI; now you have put it at 3.56 per cent.

CHAIR: The minister is answering the question, Senator; please listen.

Senator Birmingham: The budget decision was taken for the exact life of the forward estimates, which will see funding grow from $16 billion in 2016 to $20.1 billion in 2020.

Senator O'NEILL: And it goes back to CPI in 2020.

Senator Birmingham: And what happens when 2021 comes into the forward estimates next year will be a matter for next year's budget.

Senator O'NEILL: For the past two years since your government announced a $30 billion cut to schools over the decade, you and your predecessor, Mr Pyne, as well as two prime ministers, have denied the funding cut. You have claimed for two years that indexing school funding at CPI was reasonable.

Senator Birmingham: I have denied the funding cut and I still deny the funding cut. Schools funding has always been forecast to grow under this government. It has grown at record levels during the life of this government and it will keep growing into the future. It will now grow at a more generous rate than was previously budgeted.

Senator O'NEILL: You have said it was growing at CPI and you have constantly said that that was reasonable. What has changed?

Senator Birmingham: The budget has changed, and we have made a commitment to increase funding in a manner—

Senator O'NEILL: The budget has changed in the reflection of evidence explained by Mr Cook, which is the evidence that we have been saying to you, through the whole of the period of your government, indicates that the CPI funding level that you proposed was absolutely inadequate.

Senator Birmingham: Well, I hope there is enough oxygen on your pedestal over there Senator O'Neill.

Senator O'NEILL: Well, I do not find those comments particularly helpful. Is it any coincidence that this eleventh hour admission comes a week before the election is called?

Senator Birmingham: It came in the budget, which is the usual time when governments make these decisions. This was my first budget as education minister and Mr Turnbull's first budget as Prime Minister.

Senator O'NEILL: And you have a bit of a problem with this political bandaid because most of the states have rejected your announcements. I will just go through them. From Victoria:

"It doesn’t matter which way Malcolm Turnbull tries to spin it, this is another Liberal broken promise and a bitter pill to swallow for Victorian students and their families."

From South Australia:

"We don’t need more Commonwealth testing, we need Commonwealth funding."

From Queensland:

"If the Government really cared about literacy and numeracy and prep and year one, then they would put their money into additional teacher aids in the classroom ..."

From New South Wales—my great state:

"NSW will continue to advocate for the full Gonski funding in its agreement with the Commonwealth government."

All of these statements were made on the 2nd of this month. Minister, why won't you listen to your coalition colleague in New South Wales, Mr Adrian Piccoli, and fully fund the Gonski reforms that your government promised to honour at the last election dollar for dollar?

Senator Birmingham: States and territories have always asked for more money from Commonwealth governments. They will always ask for more money from Commonwealth governments.

Senator O'NEILL: And you agreed to it before the last election, Senator Birmingham—or Mr Pyne did.

Senator Birmingham: It is as certain as night follows day that states and territories will always seek more money. That does not mean the Commonwealth government should always agree to more money. We have provided more money—

Senator O'NEILL: Senator Birmingham, do you deny that your government agreed to fund dollar for dollar the full Gonski reforms prior to the last election?

Senator Birmingham: We provided not only every single dollars that was in the budget forward estimates when we came to office but an additional $1.2 billion—

Senator O'NEILL: Oops! You forgot to tell people about years 5 and 6, though.

Senator Birmingham: The budget does not go to years 5 and 6, Senator O'Neill.

Senator O'NEILL: No, but you have other projections going out 10 years now, and Gonski clearly went for six, Senator Birmingham. That is what was implied and that is what people understood—but you were lying to them there.

Senator Birmingham: You can believe what you want to believe, Senator O'Neill. When we came to office we delivered—

Senator O'NEILL: Nobody trusts you now, Senator Birmingham.

CHAIR: Senator O'Neill!

Senator Birmingham: When we came to office we delivered every single dollar that was in the budget, plus $1.2 billion that your lot had decided to strip out for Queensland, WA and the Northern Territory. We put in extra when we came to office. We have delivered that. That has brought us to a record funding level.

Senator O'NEILL: That was money you took from the trades training centres and reallocated.

Senator Birmingham: That record funding level will see $16 billion provided from the federal government for schools in 2016, and that will grow, if the Turnbull government is re-elected, each and every year in the future to $20.1 billion by 2020.

Senator O'NEILL: On page 13 of your glossy document—

Senator Birmingham: My copy is not very glossy, but maybe you have got a better one.

Senator O'NEILL: Maybe it is just the shimmering nature of illusion that comes with promises that you make. On page 13 it says: 'Future funding arrangements should be underpinned by the following principles'. This one is about stability:

… the funding model should be stable and should not change significantly from year to year and funding needs to be indexed at a rate that will keep pace with the real costs of schooling.

Yet your government has abandoned the indexation rates of the Gonski reforms from 2018. In 2014 you announced CPI indexation from 2018. This week you have put a three-year indexation rate of 3.5.6 per cent. At the same time, you are indicating that you will refer to CPI indexation at 2020. How is that a stable funding model? Why are you reverting to CPI indexation when you concede that it does not keep up with the real cost of schooling?

Senator Birmingham: Decisions beyond the budget forward estimates are matters for future budgets.

Senator O'NEILL: Is that it? That is the security that your going to give to the whole education sector across the country?

Senator Birmingham: That is the reality, Senator O'Neill. When we do the budget each year, another year comes in to next year's budget. Obviously, those decisions are decisions that can be taken in future years.

Senator O'NEILL: Can I just contrast the fact that you can make the central tenet of your budget for corporate tax cuts a 10-year projection, but education can manage to get four and you will not go a day beyond that.

Senator Birmingham: You can give a speech for the next 22 minutes, if the chair lets you.

CHAIR: No, because the chair has got questions.

Senator O'NEILL: I have got plenty more to go. I have only been waiting all day.

CHAIR: Yes, well, that's Labor and how you have managed your time throughout the day. I am very disappointed that the claimed concern about school funding—

Senator O'NEILL: Isn't it?

CHAIR: and about a whole range of other things that this estimates committee has been unable to prosecute in the budget is a result of time-wasting all day.

Senator O'NEILL: It is questions and answers.

CHAIR: So please don't complain to me, Senator O'Neill, because I will go you minute percentage minute of total time on what the government senators have had a chance to ask in the two portfolios today and what the Labor Party and the Greens have had a chance to ask. I am happy to add it up and give it to you, but it is more than 300 per cent.

Senator O'NEILL: I just want to ask questions, Chair. Do you want to ask questions? I have got plenty more do go.

CHAIR: Yes, absolutely. Thank you. I want to ask about the select committee on school funding investment. My understanding is that Senator Dastyari, who was the chair of that particular committee, is quite strong in his rhetoric about funding our schools properly. He made a lot of outlandish claims in setting up this particular inquiry—and, I might add, in gathering his chairmanship. How much do you get to chair a select committee? Does anyone know?

Mr Cook : Sorry, Senator, I do not know.

CHAIR: Minister, do you know?

Senator Birmingham: Sorry, Chair. Can you just repeat the last part of your question?

CHAIR: For select committee chairmanship, what would Senator Dastyari be collecting?

Senator Birmingham: Is it an extra 15 per cent?

CHAIR: I think it is about 13 grand, maybe. I do not know, but it is all public. People have been concerned about Senator Dastyari's feigned concern over time on a range of issues when he was on the Economics Committee, using that to further his own ambition, in the way he treated the inquiry process in the Economics Committee.

Senator O'NEILL: Chair, your verballing and character assassination of Senator Dastyari is entirely inappropriate, especially with you being in the chair's role.

CHAIR: My concern is that Senator Dastyari has done exactly the same thing on school funding investment.

Senator O'NEILL: You should withdraw that.

CHAIR: I am wondering: with all of the reports—

Senator O'NEILL: Chair, point of order.

CHAIR: I am not here withdrawing.

Senator O'NEILL: You should really withdraw that. It is a very adverse reflection on Senator Dastyari.

CHAIR: Not at all. It is actually a public comment.

Senator O'NEILL: He is not here to defend himself.

CHAIR: I am happy to table that if you like—happy. April 2015. I am not the only person—indeed, many print operators have made the same assessment of Senator Dastyari's time—

Senator O'NEILL: It does not make it appropriate for you to do that.

CHAIR: To the Select Committee on School Funding Investment, of which Senator Dastyari is Chair: did that particular committee have hearings?

Mr Cook : Yes, I think it had two—one in Brisbane and one here in Canberra.

CHAIR: One here and one in Brisbane?

Mr Cook : That is my understanding.

CHAIR: Do we know how much those hearings actually cost?

Mr Cook : No. That would not be information the department would have.

CHAIR: Okay. So the Department of the Senate?

Mr Cook : The Department of the Senate would, no doubt, have that.

CHAIR: But would your department also have that sort of information?

Mr Cook : No.

CHAIR: The Department of the Senate—okay. In terms of reporting on the findings from those submissions to Senator Dastyari on this incredibly important issue of school funding investment—and you have heard Senator O'Neill's apparent concern about school funding investment—

Senator O'NEILL: It is very real.

CHAIR: and she is also a member of that committee, as well—I am wondering: has that committee put down a report?

Mr Cook : Not that I am aware of.

CHAIR: Has that committee put an interim report down—knowing that the Senate is about to be prorogued—like so many other committees which are interested in their inquiries continuing into the 45th parliament?

Mr Cook : Again, I am not aware of any report—interim or what.

Senator O'Neill interjecting

CHAIR: Yes, lots of interim reports. Okay. I will have to follow that up with the Department of the Senate. It just seems that it is feigned interest, feigned 'upsettedness' and feigned carry-on when we actually had an opportunity for Senator Dastyari and Senator O'Neill, as a member of that committee, to put their thoughts on school funding investment to the Senate in an interim report in a timely way, rather than just running around having reckless press releases.

Senator Birmingham: There are still 17 minutes, I think, for Senator Dastyari to arrive—

Senator O'NEILL: It would have been good if we did not rush to a double dissolution. We could have actually continued the work of the parliament.

CHAIR: Senator O'Neill, are you saying that you actually considered writing a report?

Senator O'NEILL: Absolutely.

CHAIR: Really?

Senator O'NEILL: It is just inadequate time. I would like to go to the questions that are relevant today.

CHAIR: Other committees managed to table interim reports because the matters in front of those committees were of such importance.

Senator O'NEILL: Chair, can I return to these questions for the minister?

CHAIR: No. I have some questions on disability funding. I would like to go to looking at the budget announcement. Is it true, as many Labor Party senators have been claiming, that there are schools that are not getting disability loading?

Mr Cook : If the data from a school indicate that they are eligible for a loading, then they will receive that from the Commonwealth. How a state government school receive that is a matter then for the state government, so I cannot indicate whether the state governments pass that loading on to their particular schools.

CHAIR: What is the Commonwealth's level of funding this year and next year when it comes to supporting students with disability?

Mr Cook : In 2016, within the Australian Education Act, $1.3 billion. The budget announcement added another $55 million to 2016, which would make it $1.4 billion. In 2017 it is $1.4 billion, with another $63 million announced in the budget, so that would be $1.5 billion. So just in these two years, 2016 and 2017, it would be $2.9 billion. Over 2014 to 2017, it is $5.3 billion.

CHAIR: That is fantastic news, Mr Cook. You need to smile more when you give those sorts of numbers. I know it is late. But how much of an increase did the Catholic sector receive from the Commonwealth in funding for students with a disability compared to the previous targeted arrangements in 2013?

Mr Cook : I think the amount is about 220 per cent.

CHAIR: Say that again: 220 per cent?

Mr Cook : I think I might have given this evidence at previous hearings.

CHAIR: Well done, Minister.

Mr Cook : I am fairly sure it is about 220 per cent.

CHAIR: Fantastic. In terms of targeting the public spend to those most in need, this is a fantastic outcome.

Mr Cook : We actually think it is 223 per cent, just to put another three per cent on there.

CHAIR: Excellent—223. Brilliant. Can you outline how the National Catholic Education Commission came to the conclusion that 1,700 schools will have to close down if they do not get the extra students with disability funding.

Mr Cook : I am not aware of how they have used their calculations. I do not know what growth projection they might have used in terms of funds. I am sorry. That would have to be a question for the Catholic Education Commission.

CHAIR: Okay. To what extent are the states and territories responsible for funding students with a disability.

Mr Cook : States and territories are the majority funders of students with disability, because the majority of students with disability go to government schools, and state governments are majority funders of government schools. If you look at general funding, for example, I think the increase over the last 10 years, from 2004 to 2014, in general funding from the Commonwealth for government schools is about 66 per cent, and from the states I think it is about six per cent. If you equated that to disability, I think you would also find that the Commonwealth has significantly outstripped state growth in terms of students with disability.

CHAIR: Well done—good leadership. What are the new categories of students being proposed under the nationally consistent collection of data model, and how might this affect future Commonwealth funding?

Mr Cook : There are four levels that are proposed, which state and territory ministers have been considering over the last several years. The first level would be what is called support provided within a quality differentiated teaching practice. That particular level does not attract any additional funding.

CHAIR: What is that, for anyone that is still up listening to Senate estimates on a Friday night?

Mr Cook : Probably my mum.

CHAIR: Okay. Hello, Mrs Cook! A shout-out to Mrs Cook!

Senator Birmingham: Somewhere there in Queensland!

CHAIR: Could you please let us know what that particular category means in real life.

Mr Cook : Basically, that means the teachers make the adjustment within the teaching program without additional financial supports—without having to spend additional money to provide that level of support. So the teacher will modify their program. It basically means that, for a student with disability, the disability does not require significant additional financial support other than a teacher saying, 'This is your particular learning; I'm going to adjust my program in a particular way to meet your needs.'

CHAIR: We are also offering some professional development, I guess, in another part of the portfolio, around teachers getting better at that. Okay, that is that category.

Mr Cook : The second category is what is called a 'supplementary adjustment'. The least level of funding that would be attracted is supplementary. It is a slight addition to what exists in the teaching program. The third level is called 'substantial', which is pretty self-explanatory, and the last one would be 'extensive'. In relation to the current loading within the Australian Education Act, that would probably be targeted at 'extensive', even though the children that might be captured in the current data may not actually be at that particular level.

CHAIR: The Australian Education Act did not actually get to that granular level in the definitions.

Mr Cook : No, they basically used a medical diagnosis, and that generally means the most extensive levels of disability.

CHAIR: That cut out a lot of students with real-life experience at school with their disability, didn't it?

Mr Cook : That is correct.

CHAIR: So this definition is much more realistic for managing students with a disability in schools?

Mr Cook : That is correct.

CHAIR: Are there any delays in the Nationally Consistent Collection of Data.

Mr Cook : No. The time line that is being adhered to is exactly the time line that was agreed to by the Education Council, I think back in 2013.

CHAIR: I remember that.

Mr Cook : That decision by all ministers was that the first year of national data would be collected in 2015, and that did occur.

CHAIR: Excellent, well done. Thank you.

Senator O'NEILL: The 3.56 per cent indexation rate merely reflects the increasing cost of education; it does not provide additional funding. How do you therefore make the claim that you will be able to deliver needs-based funding that increases resources for school and students where investing in different programs would improve student outcomes, compared to funding levels in 2017? In particular, will funding for some schools go up by less than 3.56 per cent to direct money to schools with a higher level of need? Will you vary it?

Senator Birmingham: As was agreed with the first ministers at the COAG meeting, the Commonwealth will engage in discussions with the states and territories and the non-government sectors around the future distribution model.

Senator O'NEILL: So some schools could get less than 3.56 per cent?

Senator Birmingham: We are committed, as I have made very clear, to ensuring that distribution of funding occurs according to need and that low-SES schools, students with disability, Indigenous students or small rural and regional schools receive additional support reflective of their additional need under any future funding formula.

Senator O'NEILL: Can you guarantee that no school will get less than 3.56 per cent indexation?

Senator Birmingham: As Mr Cook outlined before, the Commonwealth does not provide funding to the vast majority of schools in Australia; it simply makes notional calculations and then writes singular cheques to states or various school authorities, who then distribute the funding themselves. No Commonwealth government can make particular guarantees about the funding that arrives in a particular school.

Senator O'NEILL: We are going to disagree about that, but there is no guarantee. People could get three per cent, they could get more, they could get less. You cannot guarantee anything about the exact needs distribution. That is still to be negotiated.

Senator Birmingham: I guarantee that funding will rise from $16 billion in 2016 to $20.1 billion in 2020. I guarantee that we will work cooperatively with the states, territories and non-government sectors to deliver a distribution model that ensures that those who need extra support receive extra support.

Senator O'NEILL: Will funding for each state increase by at least 3.56 per cent?

Senator Birmingham: I think that I have already addressed the way negotiations will be handled and the approach that we will take.

Senator O'NEILL: So there is no guarantee—

CHAIR: I was going to score easy points, but I will not.

Senator O'NEILL: Minister Pyne made some comments in his role with regard to this:

… states and territories are responsible for school education. They own and operate schools - they employ teachers. I don't think it's right for the Commonwealth to try and cover the field of a state responsibility. I don't think it's right for us to tell the states and territories how to run their budgets.

Does that sound familiar to you? Do you remember that, Senator Birmingham?

Senator Birmingham: I do not remember it, but I will take you at face value.

Senator O'NEILL: It is attributed to Minister Pyne, and it sounds extremely familiar to me. That was the government's policy at the time that the Commonwealth funding discussion was happening. It said it should not be tied to a state contribution. Has the policy changed?

Senator Birmingham: If the Commonwealth is increasing its spending, as it intends to do so, I will not tolerate any state reducing its level of investment.

Senator O'NEILL: Did that policy change with you then, Minister Birmingham?

Senator Birmingham: Mr Turnbull and the government will not tolerate states cost-shifting to the Commonwealth.

Senator O'NEILL: Before, that was called an offence:

… as we said before the election we would have a no strings attached school funding model in time.

That was what Minister Pyne said. Are you saying that you want to have strings attached?

Senator Birmingham: I will not tolerate cost-shifting to the Commonwealth.

Senator O'NEILL: Is that an admission that the no strings attached policy failed and that money has been leaking out the bottom of the bucket, particularly in the Northern Territory?

Senator Birmingham: No, I am not admitting that. I am telling you the approach that I will take to future negotiations on school funding.

Senator O'NEILL: The department would tell you that this is exactly what the Labor Party's needs based funding agreements—that your government tore up—did. And now you are going to the election promising to do the same thing.

Senator Birmingham: I must say that is not what the department told me, but it is nice of you to try to put words in their mouth.

Senator O'NEILL: So you are going to make school funding that you put in contingent upon the conditions that you impose on the states. Is that correct?

Senator Birmingham: Yes.

Senator O'NEILL: That is very different from what Minister Pyne said.

Senator Birmingham: Christopher is a good friend of mine, but we are different people.

Senator O'NEILL: The policy has changed.

Senator Birmingham: The Turnbull government has made changes to school funding policy. That is crystal clear for the world to see.

Senator O'NEILL: Is the funding going to be distributed on a one-size-fits-all model or are agreements going to vary from state to state?

Senator Birmingham: I would hope that we would do much better than your government did and that we would not have 27 different funding agreements, which is what we inherited.

Senator O'NEILL: Just an answer to the question: will it be a one-size-fits-all model or will agreements be varied from state to state?

Senator Birmingham: I will work cooperatively with the states and territories and the non-government sector to negotiate distribution so that those who need more receive more. I will be aspiring to simplify what are currently very complicated funding arrangements with 27 different models of funding across the country that we inherited.

Senator O'NEILL: What funding arrangement will be offered to jurisdictions and school systems that refuse to sign up to the coalition government's conditions?

Senator Birmingham: We will cross that bridge if and when we come to it. I hope and trust that the states and territories are cooperative.

Senator O'NEILL: And if they do not sign up, will you still give them the money anyway?

Senator Birmingham: I do not know. Would you? Will you, if you win the election?

Senator O'NEILL: We did not, because they would not sign up. You called them, and you did not think there was a problem with that.

Senator Birmingham: I am asking what you will do after this one.

Senator O'NEILL: I will not be making policy announcements this evening for you. But the reality is—

Senator Birmingham: It is not terribly clear from your policy as to how you would stop states cost-shifting in the future.

Senator O'NEILL: I am going to disagree with you there. We have not got time for that debate. Could I just go to another one of the tenets of your education philosophy. I spoke with you last time about your determination to have performance pay as something that you thought was appropriate. You indicated that in your opening speech. When I asked you to rule it out—

Senator Birmingham: In my opening—sorry?

Senator O'NEILL: I said, 'So you categorically rule out performance pay,' and you said:

In case you did not know, Senator O'Neill, the Commonwealth does not employ any teachers. So it is a bit hard for me to performance pay teachers or for the Commonwealth to do so. We do not employ any.

So, by your own admission just a few months ago, you said it is hard for you to pay teachers on performance because the Commonwealth does not employ them. What has changed since then? How can you enforce the policy that you have now announced in recent days about performance based pay?

Senator Birmingham: Let us be clear, because you and some of your colleagues in the unions are seeking to put—

Senator O'NEILL: I am not asking you about that—

CHAIR: Minister Birmingham, you were seeking some clarification?

Senator Birmingham: Senator O'Neill, you have used the phrase 'performance pay'. I just want to be very clear and quote from the document that we are talking about linking pay progression for teachers to the nationally agreed Australian Professional Standards for Teachers. This is something, I think, that, to some extent, is already the case in New South Wales and occurred with the support of the New South Wales teachers' unions, I believe.

Senator O'NEILL: How will the Commonwealth affect changes to enterprise agreements to link pay progressions to teachers—

Senator Birmingham: The Commonwealth, in seeking to link pay progression for teachers to the nationally agreed Australian Professional Standards for Teachers, will make that part of our school funding negotiations with the states and territories.

Senator O'NEILL: Who is going to make the relevant assessments?

Senator Birmingham: There is already a process in place for the assessment against the Australian Professional Standards for Teachers; a process established by AITSL.

Senator O'NEILL: What is the administrative cost of doing that?

Senator Birmingham: If there are additional costs that AITSL needs in addition to what it is already doing to benchmark those teachers who are voluntarily choosing to pursue recognition as high-performing, highly accomplished lead teachers in our system then no doubt AITSL will speak to us about that.

Senator O'NEILL: And you are going to pay for it then—that will be a federal government investment of money?

Senator Birmingham: AITSL is funded, at least in part, by us, yes.

Senator O'NEILL: Who did you discuss the proposal with before announcing it?

Senator Birmingham: Sorry?

Senator O'NEILL: Who did you discuss this proposal with before you made the announcement?

Senator Birmingham: In relation to the Australian Professional Standards for Teachers, I certainly have discussed that with Professor Hattie, the chair of AITSL. In fact, I addressed the conference of highly accomplished and lead teachers and chatted to many of them whenever that conference was—sometime earlier this year.

CHAIR: I now declare the Senate estimates done for the Department of Education. I thank Minister Birmingham and Minister Cash—and I am sure Minister Ryan wished he could have attended. I thank officers of the Department of Education and Training and the Department of Employment and all the agencies who gave evidence to us today. I look forward to seeing you at future hearings. I also thank Hansard, Broadcasting and the secretariat.

Senator Birmingham: I would add my thanks to all the departmental officials as well as the secretariat and parliamentary staff for this extraordinary sitting of Senate estimates.

Committee adjourned at 23:00.