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Wednesday, 2 December 2015
Page: 14433

Mr HARTSUYKER (CowperMinister for Vocational Education and Skills and Deputy Leader of the House) (10:26): I move:

That this bill be now read a second time.

The Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Bill 2015 introduces major reforms under the government's landmark Jobs for Familieschildcare package. This package will provide greater choice for more than 1.2 million families by delivering a simpler, more affordable, more flexible and more accessible child care system.

A key election commitment of this government was to task the Productivity Commission to undertake an inquiry into child care and early childhood learning. The inquiry was the largest review of child care since the 1990s and the commission did an excellent job drawing together a wide range of input from families, service providers, early childhood education professionals, businesses and other experts to identify the challenges and potential ways forward.

The commission found what many parents already know to be true—the current childcare system is unnecessarily complex, inflationary and fails to target support where it can have the biggest impact on supporting parents to be in jobs, especially mothers.

In the 2015-16 budget the government announced its Jobs for Families childcare package in response to the Productivity Commission report and the government's further consultations with the childcare sector and families. The package has been refined during an extensive regulation impact statement consultation process carried out since budget. The government's new childcare package supports parents as they balance work and family responsibilities, while protecting those most vulnerable, and continuing to ensure a high-quality learning experience in our childcare centres. The key elements of the package are:

A new, simpler child care subsidy, which will improve affordability

The child care safety net, which will improve accessibility and comprises the:

additional child care subsidy

Community Child Care Fund

Inclusion Support Program

The Interim Home Based Carer Subsidy Program, also known as the nanny pilot program, which will enhance flexibility.

This bill makes significant amendments to the current Family Assistance Act 1999 and Family Assistance (Administration) Act 1999 in order to introduce the child care subsidy, additional child care subsidy, new approved service requirements and an enhanced compliance framework from July 2017. These will give effect to the majority of the government's response to the recommendations from the Productivity Commission inquiry. There will also be a number of transitional provisions that will commence in July 2016 including some elements of the enhanced compliance framework.

Our objective is to help parents who want to work, or who want to work more, while still focusing on early childhood education.

Having two parents in paid employment has become a necessity for most families because of the changes in our society and economy over many years. More affordable access to quality child care puts the opportunity of work within reach for more families.

It is important to understand that support for child care is not a welfare payment. It is a payment that makes the cost of child care more affordable for families who need or choose to be in work.

The Jobs for Families childcare package is designed to encourage more families, including jobless families, to increase their involvement in paid employment. This is a significant investment to support families and is targeted to those who need it most—low- and middle-income families.

Families using child care in 2017 on family incomes between $65,710 and $170,710 will be on average around $1,500 a year better off under this package.

The package will deliver significant reform putting downward pressure on child care costs for families and making the very significant government investment in child care more sustainable.

Child Care Subsidy

The centrepiece of the reforms is the new child care subsidy.

From July 2017, the child care subsidy will replace the current child care benefit and child c are rebate with a single, means- tested subsidy.

The child care subsidy will be better targeted than current payments, providing more assistance for low - to middle-income families.

Since the Jobs for Families ch ild c are package was announced on b udget night , the child care subsidy has been modified for two reasons. First ly , it was a respon se to feedback from stakeholders who told the government that the announced subsidy rate was too generous for high- income families. Second ly , the additional funding to support the implementation of the Jobs for Families c hild c are p ackage was to be funded by savings measures for the family tax benefit announced in the 2014-15 b udget. These savings measures have not been fully realised. Taking these circumstances into account, the rate of child care subsidy for higher income families has been reduced.

The changes to the child care subsidy since the 2015-16 b udget will only affect families with incomes of more than $250,000— around five per cent of families using subsidised child care in 2017-18.

The child care subsidy rate has been revised so that, from implementation, families earning $65,710 or less will receive a subsidy of 85 per cent of the actual fee paid (up to an hourly fee cap). For family incomes above $65,710 per annum , the subsidy tapers to 50 per cent for families earning $170,710 and remains at 50 per cent until that family income reaches $250,000 per annum . That is, for these families, their child care subsidy rates will be as per the rates announced in the b udget. For families with incomes of more than $250,000 the subsidy tapers down to 20 per cent at $340,000 and above. The p ackage is most generous to those who need the most support.

Where famil y incomes reach $185,710, an annual cap of $10,000 per child will apply. Families on incomes under $185,710 will no longer be subject to a cap on the amount of subsidy they receive whereas currently all families are subject to the child care rebate cap of $7,500 per year per child.

The new subsidy will be paid directly to the childcare service providers. It will be subject to a three-step activity test, aligning the hours of subsidised care more closely with the hours of work, training, study or other recognised activity undertaken, and providing for up to 100 hours of subsidy per fortnight. The bill provides that at least eight hours of activity per fortnight results in access to 36 hours of subsidised childcare per fortnight; it also provides that more than 16 hours of activity per fortnight results in access to 72 hours of subsidised care a fortnight . Furthermore, the bill provides that more than 48 hours of activity a fortnight results in the maximum amount of subsidised child care of 100 hours a fortnight. This childcare package is fundamentally fair . This is because it provides the greatest rate of subsidy to those earning the least and provides more hours of subsidy to those who work the most.

Families whose child is attending a preschool program in a childcare service will be exempt from the child care subsidy activity test for the period of the preschool program. Separate to this legislation, the Jobs for Families childcare p ackage also includes $843 million over the next two years to guarantee f ederal support for a maximum of 600 hours of preschool in the year before school.

Additional Child Care Subsidy

The child care subsidy will be supplemented by the additional child care subsidy, because the g overnment recognises that extra support is needed for some disadvantaged and vulnerable children . This extra support is needed whether they be children at risk of serious abuse or neglect, families experiencing temporary financial hardship or parents seeking to return to work, study or training. The child care safety net aims to give our most vulnerable children a strong start. Amongst other measures, it will provide families on incomes of less than $65,710 who do not meet the activity test of up to 24 hours per fortnight of subsidised childcare. This is equivalent to two weekly six-hour sessions. These 24 hours will be provided at the highest rate of subsidy, 85 per cent, which is an increase on the current rate of about 72 per cent.

As a result of strong feedback obtained in the regulation impact statement consultations, a new element of the additional child care subsidy will now ensure that grandparents on income support who are primary carers of their grandchildren will not have to meet any activity test. It will also ensure that they receive a subsidy equal to 100 per cent of their childcare fees (up to 120 per cent of the usual child care subsidy cap).

Getting ch ildren into quality child care maximises the early learning opportunities for children who may not be getting all the support they need at home. It also improves a family ' s ability to break the cycle of poverty and intergenerational welfare dependence by minimising barriers to participation and providing access to early learning. This is one of the most effective early - intervention strategies available.

The Productivity Commission ' s report identified that existing programs that support disadvantaged and vulnerable families are complex, inefficient, poorly targeted and often open to abuse. This is particularly the case in relation to the Community Support Program , special childc are benefit and the job s, education and training child care fee assistance payment .

These payments and programs will be wound down, along with the current Budget Based Funded Program and grandparent child care benefit. They will be replaced by the new additional child care subsidy payments and other elements of the c hild care safety net, which I will speak about in a moment. Together, these will comprise a more integrated and targeted set of funding programs that leverage the increased Commonwealth investment in child care to provide the best early- learning outcomes, particularly for those most in need .

The new payments will remain linked to immunisation requirements that will, from 1 January 2016, be strengthened under the No Jab, No Pay policy.

Elements of the Jobs for Families childcare package outside the legislation

The Jobs for Families childcare package also includes a number of other important measures that are not formally part of the bill being introduced today. These measures will be considered and/ or introduced separately over the coming months with further consultation with the sector and affected families as program guidelines and processes are developed.

Briefly, these elements include:

the childcare safety net, in which the government will invest around $860 million by 2018-19. This includes nearly $180 million for the additional childcare subsidy that I have talked about. It also includes $409 million for the Inclusion Support Program starting in July 2016 that will assist services to support children with additional needs. Furthermore, it will include more than $270 million for the Community Child Care Fund starting in July 2017 that will provide grants to services to reduce barriers to access, particularly in remote Indigenous communities and regional areas.

The Interim Home Based Carer Subsidy Program, more commonly known as the Nanny Pilot Program, will, from January 2016, support families such as shift workers and families based in regional and remote communities who find it difficult to access mainstream services.

This legislation is reinforced by strengthened compliance arrangements to ensure that this massive investment in child care of almost $40 billion over four years including more than $3 billion in extra funding is used as intended. Compliance measures in this legislation include the power for the minister to make legislative instru ments to place a pause on child care service applications in relation to a particular service type for a defined period. This measure will help us heed the recent lessons from family day care, where the number of services has grown rapidly from 300 in 2011 to more than 1,000 in 2015 and where fraud and non compliance are estimated to have cost the taxpayer at least $300 million per year.

Closure and tran sitional arrangements for child care payments

The bill includes consequential amendments and will provide transitional provisions to support th e replacement of existing child care payments with the child care subsidy and additional child care subsidy. The July 2017 start date for these payments has been chosen to give families and service providers time to adjust to the new model and support the seamless introduction of new systems and arrangements.

Review and e valuation

Given the significant nature of this reform, it is important that its implementation and impact is understood. To that end, there will be an ongoing monitoring review of the package. An integral part of that strategy will be a post-implementation review following 2017-18 and an impact evaluation undertaken between 2020 and 2022.


In conclusion, this bill, and the Jobs for Families childcare package more generally, will deliver significant and greatly needed reform through a simpler, more affordable, more flexible and more accessible childcare system. It is a fair approach that provides the greatest support to those who depend upon it in order to work, or work more hours. This package represents an important investment in Australia's future and is a key element of the government's plan to build a strong, safe and prosperous Australia for the future.

I commend the bill to the House.

Debate adjourned.