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Wednesday, 15 June 2011
Page: 6068

Ms LEY (Farrer) (10:27): by leave—I move opposition amendments (1) and (2) circulated in my name:

(1) Schedule 1, item 15, page 7 (lines 29 to 31), omit subsection (4), substitute:

(4) The Secretary may require only financial information that:

(a) is of a kind listed in section 219GAA; and

(b) relates to any of the 5 financial years immediately preceding the date of the notice.

(2) Schedule 1, item 15, page 8 (after line 15), after section 219GA, insert:

219GAA Financial information that may be required

The following kinds of financial information may be required under section 219GA:

(a) a statement of comprehensive income, profit and loss statement or statement of financial performance;

(b) a statement of financial position or balance sheet;

(c) a statement of cash flows;

(d) notes to the accounts;

(e) information relating to material (that is, greater than 10%) changes to the financial situation over a reporting period;

(f) information relating to breaches of debt covenants;

(g) information relating to ownership and organisational structure;

(h) information relating to sale or closure of child care services;

(i) information relating to plans to purchase new child care services;

(j) whether in the past 12 months any director was subject to personal bankruptcy proceedings or was a director of a company subject to insolvency proceedings;

(k) whether the operator has guaranteed the debts of another organisation in the past 12 months.

The coalition accepts that this bill will pass and that the department will seek financial information from 25 of Australia's largest childcare providers. As I said in my speech in the second reading debate, I think this is a piece of nonsense. I do not really think it is even about the collapse of ABC Learning. I think it is the government taking a swipe at the private provision of child care. It is about a Labor government that cannot help itself from taxing, spending and interfering, and this is a major interference sort of bill. Having said that, we do accept that the bill will pass. But I really take exception to the types of information that this bill allows the Department of Education, Employment and Workplace Relations to ask of those 25 large private providers of child care. We believe that the financial statements, reports and information outlined in our amendments provide ample evidence of a business's financial viability. Our concern is that, given the power to acquire additional information at will, the department may well exceed the mandate intended by this bill. So in our amendments we are specifying the actual information that the department may view from the childcare provider. We could decrease the administrative burden on the centres that could eventuate should these amendments be rejected. I remind the House that childcare centres are accountable to shareholders, boards and owners. Annual reports are compiled, accountants employed and businesses advised on their own viability. ASIC already provides stringent requirements for companies, very clearly outlining the obligations of directors. Where a director is in breach of his or her obligations in this role, then action can be taken. Where a centre is not viable, action would and should be taken by the organisation to rectify the situation. It is ridiculous that we would expect the government to step into this role.

There were a range of comments opposite that rang alarm bells to me, particularly the member for Robertson who said this bill was about taking aim at profiteering and unacceptable risks, as if those who provide private child care—if let get out of hand—would outrageously profiteer and take risks that they should not take. Members opposite have said that this will make centres accountable for their financial decisions—they are already accountable, as I have outlined.

The minister has mentioned the regulatory impact statement, which I have looked at in detail, and there was a long and complicated consultation process leading up to this. There is a national quality framework—I have had a lot to say about that on other occasions and I will again—but of that large allocation of, I think, $270 million, $1.9 million has been aside. If we create an inspectorate within the department, its job will be to assess the viability of new providers. Presumably this new allocation of funding is to employ new public servants. I do not mind new jobs but new jobs have to be productive, valuable and meaningful. I do not think anybody who moves into such a job would say, 'Everything's going well; we have the checks and balances in place—we don't need to be here.' No. Armed with clipboard, information, ratios, statistics and a questionnaire that is actually quite intrusive and insulting to providers, this new inspectorate would seek to gain information that it has not right to gain.

Having looked at the regulation impact statement, I then also talked to some of the stakeholders. I do not believe it is the case that everyone is quite relaxed about this. Many of them have said to me, 'We have so many other problems in the childcare sector at the moment and they relate directly to affordable child care.' I guess for some of us this is just one more burden. You cannot have a new initiative without a new framework, so the department employed McGrathNicol and they have provided a weighty document titled A framework to assess the financial viability of large long day care providers. In it they talk about the ratios that we, in our amendment, will limit the department to in terms of its requests. What is particularly alarming is that part of what the minister proposes is an operational organisational questionnaire. This is qualitative information, not quantitative. (Extension of time granted) The questionnaire of which I speak seeks information from long day care providers such as the following:

Please provide a diagram illustrating the ownership structure of your organisation and a detailed description.

I guess you would think that was fine.

Has the provider sold any services? List the names of the services, their addresses, the number of places provided, where they were operating, when, the reason why the services were closed, which organisations bought these services? Does the provider have plans to purchase new services over the next 12 months? If so, please list the name of the services et cetera. Does the provider have any other significant business activities outside the operation of childcare centres? If so, what percentage does revenue from childcare activities constitute your organisation's total income?

I have just pulled out four or five questions from this document. I think it is outrageous that middle-level bureaucrats—God love them!—in a public service department should be sent by their minister on a fishing expedition to childcare providers who, by virtue of the fact that they are the 25 largest providers in the country, will be doing this stuff to death.

We know the requirements that ASIC places on organisations. We know that the accountability is extreme. Why we would therefore need ratios to be calculated, qualitative data to be collected, a new section in the department to be created—all for what? There are so many more good uses to which we could put this $1.9 million of funding. The minister said the stakeholders are relaxed. In the consultation, they did not really indicate that they were relaxed. Some of them—and I quote from her own statement—said they were 'concerned about the confidentiality of information provided to the department in accordance with the proposed framework'. The information is actually none of the department's business.

Remember, if you are entitled to receive childcare benefit assistance from the Commonwealth, you already have to demonstrate your financial viability. You already have to provide significant information. You have to provide weekly occupancy data, for goodness sake. As if the department could not look at that and say, 'Perhaps there's something not right happening here concerning your financial viability.'

Providers have not said it is fine. My interpretation of their response—and remember, we are only talking about the top 25—is, 'We have so much else on our plate; I guess we will have to deal with this as well.' But it will cost providers. Why should a small business have to come up with information that is totally unrelated to its activities when it has already satisfied stringency requirements, when it has already provided this type of information over and over again and it is in the public domain? Why should they have to do this?

I might add that some providers have commented that had this framework existed prior to the collapse of ABC Learning it would not have captured the financial viability risk of that organisation in advance. People in the department do not have the skills to calculate the financial ratios and determine risks. Presumably that will be outsourced. What starts off as a small section—$1.9 million, a few people—could grow. It will be the easiest thing in the world for this particular framework to be extended to every childcare provider, so that small providers will also be caught up in it. If you are talking about the risk of becoming unviable, and you are targeting that risk, why would you target the risk of somebody in a big way and not somebody in a small way? If that is the premise you are coming from, why would you not ask: is somebody who has just set up one or two centres—perhaps a sole trader or a partnership operation—not more likely to encounter problems than a large provider? Are they not more likely therefore to close their doors?

The minister and other speakers have talked continually about parents coming to the centre in the morning and the doors being closed, as if that tragedy, in some respects, is somehow connected to the substance of this bill. It is not.

I urge all members of this House to support my amendments, which list, specifically, the information that the department may ask for. As I have said, this bill is a waste of everyone's time. We accept that it is going to be passed but we do say that the information should be restricted to financial information and should be restricted to the financial information detailed in the amendments. There are the usual statements you would expect to see—profit and loss accounts, cash flows, notes to the accounts and various other pieces of information. (Time expired)