Julie Doyle: Simon Birmingham, thanks for coming in. Let's start with these figures that have been released by Goodstart Early Learning. Now, Goodstart says they are happy with the economic impact of the package, but they still want some changes to help disadvantaged children. Are you open to any revision here?
Simon Birmingham: Well, we are very encouraged by the modelling from Goodstart which does demonstrate that this reformed child care will lift workforce participation, will have a lift to the economy, and will make most families better off, and especially those families who are most reliant on child care because they are in the workforce and they are looking for that financial support to make child care more affordable.
Now, yes there are a few areas in which Goodstart are suggesting some changes, and of course we will always have a look at the evidence and the arguments, but the package is quite generous for low-income parents who are not in the workforce. It provides 12 hours a week for subsidised child care even if you are not in the workforce. And it’s not very much to actually get more than just that 12 hours, because the activity test is quite light touch, it only requires four hours of activity from a parent. And it doesn't just have to be working; it can be studying, looking for work, volunteering, which will increase the entitlements of parents to subsidised child care.
Julie Doyle: On that 12 hours a week though, that figure, currently 24 hours a week, so it’s a halving of what you can get without meeting an activity test. Why did you make that decision to cut it back in that way?
Simon Birmingham: Because we want to make sure that the child care support we have is targeted most directly to those families who are most reliant on it to juggle their work and family responsibilities. So we’re putting an extra $3 billion on the table. Our reforms will make families earning between $65,000 and $170,000 around $1500 a year better off in terms of the reduction of the child care costs that they will face. And of course, to make all of those changes and to be able to pay for those changes you have to look at how the whole system operates.
So we are deliberately and unashamedly targeting support at those who are in the workforce or studying or volunteering and need it most. But there is that safety net there of the 12 hours a week to give that child care and early learning and valuable early educational experience to those young children, which is in addition to the guaranteed 15 hours of week of preschool support that we provide for all children across the country.
Julie Doyle: The activity test is the contentious element; if you look through the submissions that have been submitted to the Senate inquiry, from across the board in the childcare sector, and they point to concerns about the activity test. So are you open to any tweaking on that element?
Simon Birmingham: We'll listen to all of the evidence, but the activity test is essential to ensure that this reform targets child care to those who are working the hardest and or earning the least. And this is the way this reform …
Julie Doyle: [Interrupts] So you listened to the concern, but will there be any change?
Simon Birmingham: Well, if there is strong enough evidence. But what we want to make sure is we stick to a package that encourages and supports people who are working, studying, volunteering, and gives them the help they need. And the way the package has been structured ensured that the more hours you work, the greater hours of subsidised care you will be entitled to, and the less you earn, the greater the rate of subsidy you’ll be entitled to.
So it’s an incredibly fair package in that sense for parents out there who are struggling with the cost of child care. If they are earning minimal amounts they will get up to 85 per cent of the child care costs paid for. If they are working long hours, they will get very generous entitlements. If they are struggling to find hours, of course, this package as well is trying to reform that so that we do ensure that the hours of subsidised care are best targeted to those who need to access those hours to meet their work or study or volunteering commitments.
Julie Doyle: What about the number of families that will be worse off under the package? The Opposition says that it’s one in four families, is that what your modelling shows?
Simon Birmingham: Not at all, not at all. So we know that around 1 million Australian families will benefit, and many will benefit as I said quite significantly with a $1500 per annum reduction in their child care costs. The only families who will lose essentially fall into one of two categories. One is where they might be accessing what are currently very expensive child care services, and we hope that the change in the fee mechanisms we are putting in place will put some downward pressure on those expensive services. But the other – and the bulk of the category – are those who are impacted by the activity test. So yes, if you are currently claiming taxpayer subsidies but are not working, studying or volunteering for four hours a week you might lose some of your entitlement.
Julie Doyle: Now, you've also released figures showing how much child care subsidies cost the Government in the March quarter last year. Are these changes about saving money or improving the system for families?
Simon Birmingham: These changes are overwhelmingly about improving the system for families. We are in fact committing an extra $3 billion of spending over the forward estimates as part of these reforms to make child care more accessible for the bulk of working families. But, yes, we are always trying to constrain the rate of price growth which we've seen in child care in recent years, which has been unacceptably high. We saw the way in which the Labor Party reformed some child care arrangements, just drove prices up quite dramatically, and that of course increased costs for parents and for the taxpayer. And the data we released this week demonstrates that for the March quarter last year, child care costs for the taxpayer were up close to 20 per cent on the previous year's quarter – that's a remarkable growth rate.
Julie Doyle: Now, let's talk about a couple of issues outside this area, and the GST. Now, there has been reports that there is disquiet amongst some on the backbench about a potential increase in the GST. Have you been talking to your colleagues in South Australia? What have they been saying to you about this?
Simon Birmingham: Well I talked to my colleagues in South Australia and across the country, and overwhelmingly my colleagues and people in the Australian community want to see us look at tax reform in an holistic way. The GST is just one piece in a bigger puzzle, and the Government's commitment and intention is to make sure that any tax reform we embark upon is driven because it will be a better tax system that will encourage economic growth, that will encourage job growth in the future; not about raising more revenue, not about increasing the tax burden. We want to keep taxes as low as possible. This is purely about whether you can have an improved tax system by making variations that better encourage economic and job growth in the future.
Julie Doyle: Are you picking up, though, any concerns that this could be an unpopular measure that would put some of these seats at risk?
Simon Birmingham: Tax reform is never easy, and governing is not easy, but there is an awful lot of respect out there in the community for the fact that Malcolm Turnbull, Scott Morrison and the Government have had the courage to say nothing is off the table. We want to make sure …
Julie Doyle: So you’re not hearing any disquiet from your colleagues?
Simon Birmingham: I think overwhelmingly people are backing the fact that we are taking an holistic approach, that we are serious about ensuring we look at every aspect of the tax system. Whatever we produce will be fair, will be driven by the objective of economic growth, and will be taken to the people so they can have their say at the next election.
Senator Birmingham’s media contact: James Murphy 0478 333 974
Nick Creevey 0447 644 957
Department Media: email@example.com