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Thursday, 7 November 1985
Page: 1736

Senator PETER BAUME —My question is directed to the Minister for Community Services and relates to the announcement he made today about new arrangements for child care and child care subsidies. Did his announcement include an approximate halving of the subsidy levels for long day care from $30 to $16? Did it involve income testing of families and withdrawal of subsidy for rises in income? Is it a fact that at the announced withdrawal rate no subsidy will be paid for families with an income of about $340 a week, that is, about the level of average weekly earnings? Who will administer the income testing? How much money will be saved by these new measures? Will the extra costs for families run as high as $25 a week for each child care place?

Senator GRIMES —I will try to draw the questions together in a couple of answers. Child care will involve an income test, as is involved in child care subsidies now and has been for many years. Secondly, the savings will be about $10.4m a year on existing child care expenditure, but I remind honourable senators that in the next three years there will be an increase in child care expenditure of $107m to fund 20,000 new places. Thirdly, there will be increased child care costs for many people. At the bottom end of the scale the increase in costs will be 5c an hour or, if people have children in weekly child care, about $2 a week. At the top end-those in receipt of above $30,000-some people will have to pay up to a $29 a week increase in child care expenditure. This means that there has been a redistribution of child care costs so that those people who can afford to pay will have to pay more.

Senator Baume asked whether the Commonwealth subsidy has been decreased from $30 to, I think he said, $15. The implication was that it has been halved. That is not so. What happens now is that we have a salary subsidy. We are changing that to a per capita subsidy for each child in child care. For those up to three years of age it will be $16 a week. For those over that age it will be $11 a week, recognising the difference in costs involved in looking after children in this age group. That does not mean that the amount of funds available to the child care centres will be halved because they will be made up by the changes that have been made to the fee relief system.

All in all, we are making a small change to funding of child care as far as total expenditure is concerned. We are redistributing the subsidy so that there is a more equitable system. We are laying the basis for the future whereby we can continue to expand children's services as we have done in the past, but in a way that is affordable by the whole community.

Senator PETER BAUME —Mr Deputy President, I wish to ask a supplementary question. The Minister mentioned that there may be some fee increases for those in receipt of incomes over, I think he said, $30,000. Is it not a fact that his Press release states that under the fee relief system people earning over $225 a week-that is, about $11,000 a year-will in fact start to pay higher fees because they will suffer under the income testing as it applies to fee relief? Is it not a fact that once their incomes reach $350 a week, which again is below average weekly earnings, the amount of withdrawal may well remove the entire subsidy from those people?

Senator GRIMES —I think I can best clarify the matter this way. About 48,500 families using child care and family day care centres in this country-that is, about 58 per cent of the people using child care centres-will pay no more than an extra $2 a week. Most of them will pay considerably less than that because they do not have children in care for 40 hours a week. About 5,000 families-that is, about 6 per cent of all users-with incomes of around $26,000 and above may have increases up to $10 a week, but for most of them the increase will be considerably less than that. About 9,000 families, or about 10 per cent of users, mostly on incomes which are greater than $30,000 a year, may pay between $10 and $20 more a week but, depending on how many hours they use child care, they may pay considerably less than that.

A very small percentage of families-a total of about 1,600, or less than one per cent-who have incomes of $36,000 a year or more will pay between $20 and $25 more a week. I make no bones about it. They will be paying those increased fees. They are very small numbers of people. In fact, some people-about 2,500 families, or about 3 per cent-will be paying less. They will be those on incomes of between $26,000 and $32,000. Under the system as it existed for the last few years, people on $28,000-plus received the same amount of subsidy. They did not pay any more for their child care. We considered that this was not an equitable system. It did not encourage child care centres to get people to pay what they could afford to pay. It did not encourage them to cut costs. We are about making the system more equitable and building the basis of a system which can be expanded in the future at reasonable costs for all.