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Thursday, 19 June 2008
Page: 2833

Senator ALLISON (Leader of the Australian Democrats) (11:45 AM) —The Democrats support this omnibus bill which gives effect to changes to the childcare tax rebate and the childcare benefit, along with a number of other changes. The Family Assistance Legislation Amendment (Child Care Budget and Other Measures) Bill 2008 implements the government’s election commitment to increase the rate of childcare tax rebate from 30 per cent to 50 per cent of out-of-pocket costs and to increase the annual limit per child from $4,354 to $7,500 per income year. The bill also provides for the childcare tax rebate to be paid quarterly instead of annually at the end of the tax year, to help families meet the regular costs of child care closer to when they arise.

Accessible and affordable child care is one of the critical issues for working families and one of the biggest barriers to mothers re-entering the workforce—sometimes fathers, but mostly mothers. There have been many warnings that the lack of affordable child care is hampering our economy, stalling workforce participation and exacerbating Australia’s skills shortage. Almost a quarter of a million women are not working today because they cannot get child care. The majority of those have preschool children, and many have children under two years of age. But child care is not just about enabling parents to participate in the workforce; it should also have a very important role in early childhood development. High-quality child care and early childhood education are crucial to improving educational achievement and curbing antisocial behaviour and child poverty. Early childhood development should be at the centre of childcare debates. Early childhood education lays the foundation for effective learning and improves social, cognitive and emotional development. Access, affordability and quality are all very important in child care.

The measures in this bill deal primarily with affordability, but this is not the only issue, as I have said. I will come to those other issues shortly. Many families struggle to afford child care, and its cost often outweighs the net financial benefit to families for parents to work. The childcare benefit made child care more affordable temporarily. However, the gains in the affordability have been eroded by fee increases far in excess of increases in the childcare benefit, which are linked to the CPI. We have heard that in the past five years childcare costs have increased by 65 per cent compared with an increase of only 17 per cent in disposable income. Childcare fees increased by 12.9 per cent in 2006 alone. I might point out at this stage that I am not arguing that childcare fees should be cheaper, because properly trained staff and properly paid staff cost money.

When the previous government introduced the childcare tax rebate, it was welcomed as a significant injection of additional funding for the sector and also as a way of assisting with the out-of-pocket expense of child care. But there were significant concerns about the rebate, particularly that much of the extra support available from the tax rebate was soaked up by higher fees. There were also concerns that higher income earners would benefit most. Not surprisingly, these same concerns have been raised again with the current government’s undertaking to increase the rebate to 50 per cent. It is true that the rebate has high annual maximum rebate levels that will probably only benefit higher income families using full-time care. Few families can afford to pay the thousands of dollars in out-of-pocket costs that would entitle them to the maximum rebate of $7,500—and, as in 2004, we do not really know what impact the rebate will have on fees.

Childcare costs, as measured by the childcare component of the CPI, have grown well above inflation since right back in 2003—before the childcare tax rebate was announced. Over the last four years, increases have been between 12 per cent and 13 per cent per year. We do not know either to what degree increases in childcare fees are being driven by factors such as wages or demand for places versus childcare operators taking advantage of families’ greater capacity to pay due to the increased government subsidy provided by the rebate. In the March quarter this year, childcare costs rose a further 4.5 per cent. It may be that that was in anticipation of this increased rebate or it may simply be the increasing demand for places and the increasing costs of operators.

The measures in this bill deal primarily with affordability but neglect those other elements, which I will come back to them. We have heard reports that some operators are going to put up their fees by as much as 10 per cent, and I guess we will have to wait and see what happens. What we do know is that there is still nothing in this payment mechanism to prevent the extra funding being very quickly absorbed into higher fees or higher profits. Certainly the example of other open-ended subsidies such as the 30 per cent private health insurance rebate suggests that they certainly do not put any downward pressure on costs. This is why the Democrats, along with others, have been calling for a schedule of standard childcare fees similar to that for Medicare healthcare costs.

We also need governments to be prepared to fund new childcare centres where they are needed. I notice that in the budget there were some new childcare centres proposed to be built—co-located, I think, with schools and the like. We welcome that, but we need to make sure that they are placed in areas where there are already serious shortages. In my part of the world, Port Melbourne, and in inner Melbourne generally, there is a shortage of places because of the value of residential land. I urge the government to take that into account. But they should also assist in providing land to build new centres or expand existing services, perhaps in collaboration with state governments. Perhaps the federal government could provide the capital for these new centres to be built.

But it is not just about making more places available. We need a funding and quality control system that delivers the environment which all the experts tell us is needed to achieve the best outcomes for young children. Thirty years of child development research says that the key factors in quality child care are the ratio of staff to children, the number of children in the group in which they are cared for and the qualifications of the staff caring for the children. So we need a system that provides child-staff ratios of at least one adult to three children for infants, at least one adult to four children for one- to two-year-olds and at least one adult to eight children for three- to five-year-olds. We need a clear strategy that will deliver enough properly trained and accredited childcare staff. Childcare professionals are leaving the industry at a time when we need to retain all of those that we have and to recruit and train more staff.

One big problem that I have raised many times in this place is the fact that many childcare workers have no formal qualifications at all. The Democrats argue that we must move to a system where all childcare workers have at least two-year equivalent post-secondary qualifications in early childhood development. We need to double the proportion of childcare workers required to have early learning specialist degrees. This is a very important area of education and it is ludicrous that we require teachers to be trained but not those who deal with young children. We should expect no less for children receiving education and care prior to their entering school. We must also improve the working conditions for those who work in this field. The people who work in child care are amongst the lowest paid in the country. There is also a very clear difference between the salaries of those working in the private sector and those in the community sector, and there is a lack of career opportunities. Without fair pay, quality working conditions and long-term career options, people will not choose to work or stay in this sector. So we must make sure that as well as a properly trained workforce there are national standards for age-appropriate development programs and for maximum group sizes. The Rudd government has promised a national early years workforce strategy, and we look forward to seeing that. They have promised to remove TAFE fees for childcare diplomas and to create more early childhood university places. They are very welcome moves, but they are still just the tip of the iceberg.

Time and time again evidence has shown that parents are saying they cannot afford childcare costs. Raising the childcare rebate from 30 to 50 per cent will certainly help in the short term, as will allowing the rebate to be paid quarterly instead of annually. It took the previous government three years to realise that having families receive the 30 per cent rebate two years after they had to fund increasing childcare costs was a luxury that many parents simply could not afford. The Democrats and many others argued when the rebate was first announced that making people wait would not help most families. A payment four times a year is a distinct improvement on the previous situation, but it will still be difficult for some families to pay their weekly bills.

This legislation also makes some changes to the childcare benefit. Much has been made by the opposition about the removal of the minimum rate of the childcare benefit, which means that some families will no longer receive the benefit payment at all. It has to be remembered that the minimum rate of the benefit was put in place so that families would get some assistance with child care, regardless of their income. We now have the rebate, which is not means tested, so there is still a means-test-free method of providing assistance. Additionally, childcare benefit and childcare tax rebate work together. Families who receive lower levels of the benefit have higher out-of-pocket costs for child care and, therefore, get more benefit from the rebate.

As I have said, the Democrats will be supporting this bill because it will bring relief, however temporary, to families. We need a comprehensive, long-term solution to the needs of families and children. Tax reform is not the way to fix child care, either to contain costs or to address problems of quality. We should not continue to let the market dictate allocation of places, costs and quality.

In 2006, the OECD published a comprehensive survey of early childhood education and child care. It expressed a preference for direct funding of childcare services as opposed to the path that we have gone down in recent years in Australia. According to the OECD, the conclusion reached is that direct funding brings, for the moment at least, more effective control, advantages of scale, more even national quality, more effective training for educators and a higher degree of equity, access and participation than parent subsidy models. Increasing the Commonwealth contribution is not a bad thing, but we would urge the government to take heed of that OECD report and, in the not too distant future, consider it and consider directly funding child care instead of the system that we have. I remind the government that the return from investing in early childhood development in terms of childrens’ future development and their integration into society is invaluable.